Part 27 (1/2)
Joe Links
”Mr. Governor, I would go. I would go now.- Although double taxation was held out publicly as the main reason for the transfer, several other factors contributed to the move.. Despite the British board's
Keswick, who was knighted in 1972, later reminisced about that momentous day. ”I had very mixed feelings. It was a bit like your child departing, you feel sad, but only momentarily because you know it's the right thing to do. I recognized that it should be done but didn't feel politically competent to handle the transfer to Canada. Politics is not my game. I'm just a dirty little merchant adventurer, with an eye on the main chance.”
In fact, Tony CANADIAN AT LAST 453.
reservations about the quality of Canadian management, it was increasingly ludicrous to believe that an absentee board of part-timers could direct a modern retailing operation an ocean and half a continent away. It had become obvious that to stay in the race, the HBC would have to expand its retail operations significantly, which meant undertaking some serious public financing. In such transactions, the Companys dual citizens.h.i.+p was sure to depress credit ratings. Since no British trading company with a royal charter had ever moved abroad-and since the Canadian directors didn't really wish to lose that privileged status-some new corporate formula had to be discovered.
The nian who found it was David Guest, a senior partner at Blake, Ca.s.sels & Graydon, the Toronto legal factory, who drew up a new Canadian Charter (to be granted by Elizabeth 11 in her capacity as Head of State of the United Kingdom and Canada) that would simultaneously keep the Company incorporated under the Royal Charter of 1670 and turn it into a Canadian corporation, subject to nearly all the standard provisions of the Canada Corporations Act.* Outlining the effect of
Keswick would probably not have voluntarily sanctioned the departure of his beloved Company for foreign parts in a thousand years. He retired from the board not long after the fatal vote and sold all his stock but never left the Company in spirit. Of all the modern I IBC Governors, he alone magnified the grandeur ofthe I 113Cs past without using it to reflect glory on himself.
*The Queen granted a new Charter, the old one remaining but with a supplementary charter attached. The crucial work was done by the Clerk of the Privy Council in London. The Company's main exemption from the Canada Corporations Act was that the 1113C would never have to use the word ”Limited” in its name, because it is not and never was just another incorporated enterprise with limited liability. In his search for precedents, Guest found that the Victorian Order ofNurses and the Dominion Drania Festival had been granted similar privileged status.
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Guest's approach, Murray wrote to Amory that it meant the ”transfer is a historical move with certain economic consequences, rather than an economic move with historical consequences.” That wonderfully meaningless phrase appealed to the Governor's sense of irony; he immediately wanted it translated into Latin and used on the crest of the new Canadian incorporation.
Before Guest had thought through his formula, both Michael Pitfield, the Clerk of the Privy Council in Ottawa, and Britain's Solicitor-General, the Right Honourable Sir Dingle Foot (eldest brother of Michael Foot, later leader of the Labour Party), had considered transfer impossible without winding up the Company in England first, which would have disrupted its continuity, cost much in new incorporation expenses and had dire tax consequences. When initially confronted by HBC officials advocating the transfer, the two men, who up to that time had not spoken, used the same metaphor to describe why they thought it could never be done. As if on cue, they said it was not technically feasible because it would be ”like trying to reverse the immaculate conception.” Following that rebuff, Murray recalled going to see Pitfield with the Guest opinion. ”I had never met him before, and I stumbled into his office, as I often do, without having organized my sentences, but when I showed him Guest's letter, he read it, and like Rex Harrison in My Fair Lady telling Eliza Doolittle that she's got it, he said,'My G.o.d, he's right. Itcan be done.”'
Prime Minister Lester Pearson had written a personal letter (drafted by Murray) to Prime Minister Harold Wilson advocating the HB(,s transfer, and most of the outstanding questions seemed to be resolved when a new issue came up. Sam Bronfman, acting through Harris & Partners, a Toronto investment dealer, launched a takeover attempt to acquire 100 percent of the 14BCs stock. Murray met the Bronfmans'
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intermedliary, Noah Torno, who had become a minor partner in the Seagram business when his Danforth Wines was bought out in 1948, and told him that on no account would the Canadian government countenance a takeover of the FIBC. Torno backed off, but the incident triggered a series of unexpected events.*
To prevent other takeover attempts, Murray started to lobby Ottawa for a special amendment that would not allow any investor to hold more than 10 percent of the Company's stock for a five-year period. A comparable owners.h.i.+p rule already existed for Canadian banks, but no other private-sector company enjoyed a similar privilege. The board had reluctantly accepted the notion, but there was one holdout: David Kilgour, who had succeeded Elmer Woods as head of the Canadian Committee in 1904. President of Great-West Life, son of a judge, father-in-law of a future prime minister and a pillar of the Winnipeg Establishment, Kilgour was debonair and worldly yet obstinately ambitious. During his three decades at Great-West, he had become used to behaving like a Chief Executive Officer and saw no reason to change his ways when he took on the HBCs Canadian Committee chairmans.h.i.+p. That quickly brought him into conflict with d.i.c.k Murray, who as Managing Director was charged with running the
*It was not the first time the Bronfinans had taken a run at the HBC. In 1952, Allan Bronfnian, Sam's younger brother, approached Governor Cooper to buy Hudson's Bay Oil & Gas for Royalite Oil, which then managed most of the family's energy investments. C ooper turned him down but described the encounter in his diary: ”The Bronfinans, who began as bartenders and bootleggers, have made a fantastic fortune and they seem to buy new companies almost every day... I liked him and would have asked him to lunch, but Elmer Woods has advised me that Phil Chester hated him so much, he would have been most unhappy” [Alay 30, 1952].
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Canadian operation. The rift between the two men soon widened beyond repair.* Operational difficulties aside, their positions had hardened on the 10-percent owners.h.i.+p rule. Murray was now dedicated to achieving the five-year limit, while Kilgour had dug in at a full ten years and was personally lobbying John Turner, then the federal minister of 3ustice, who had married his daughter Geills.
That not only subverted Murray's efforts at working through the proper Ottawa channels but also roused the ire of Amory because lie and other board members were convinced Kflgour's real motive for backing the longer term was to guarantee himself a quiet decade as the HBCs first Canadian Governor. Amory had already indicated that a Canadian would be named to head the Company immediately after patriation, but no one had yet been picked. K-ilgour considered himself the ideal candidate, being familiar with the HBCs Canadian workings-and being dangerously close to the end of his stewards.h.i.+p at Great-West I~Ife. (Control of the Company had been purchased by Power Corporation in 1969, and Paul Desmarais, the Montreal conglomerate's chairman, was known to be unhappy with Kilgour's style of management.) After Kilgour had been involved in several minor attempts at trying to usurp the authority of both the Canadian Managing Director and the British board, Murray's patience broke, and on February 14, 197 0, he wrote to Amory requesting that Migour be immediately dismissed because he ”had not only failed in his
*Their relations.h.i.+p turncd so nasty that Amory called a special board meeting in the viceregal suite of the Windsor Hotel in the autumn of 1969 to discuss the impa.s.se. Most of the directors backed Murray. The two men reluctantly shook hands; but nothing was really resolved.
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responsibilities as a director and as Chairman of the Canadian Committee, but had indeed violated the trust placed in him as the premier of the Canadian directors charged with special responsibilities for loyalty and cooperation with the Governor of this Company.” Two weeks later Amory wrote to the Canadian Committee Chairman, demanding that he submit his resignation at a forthcoming Montreal board meeting because, as he put it, ”not only is there a lack of mutual confidence between you and the Managing Director but increasingly between you and me.” Kilgour refused to quit. Amory got tough. He sent a cable informing the recalcitrant Chairman that if he didn't offer his resignation he would be retired involuntarily. Kilgour kept his peers on edge until the last minute. They had misjudged their man. He may have overreached himself, but he was too proud to be humiliated by the swarm of former colleagues now baying for his blood. So as the first order of business at the March 6, 1970, directors' meeting he resigned with a flourish, wis.h.i.+ng the Company a long, happy future, and walked out.
Not quite. A week later he wrote a stinging rebuke to Amory, denying all of Murray's accusations. ”We reached exactly the right conclusion,” he wrote, ”but I was unhappy with the 'saturation bombing' you felt was required in getting there.... There was an amusing cartoon in the New Yorker a few years ago of a mild little man sitting at a Board room table with about a dozen big, redfaced, bl.u.s.tery Directors. He was shown breaking into their debate with the remark, 'Haven't you forgotten that I own 51 percent of the stock?' Some of us at times forget that in the Hudson's Bay C ompany Britishers own over 90 percent.” Amory, ever the gentleman, replied: ”During the unheroic years in which I served in the Army, I was taught that when in doubt deploy maximum fire power! However, I hated doing it and if I did 458 MERCHANT PRINCES.
overestimate, I can only ask you to forgive me.... It was, I think, one of your fellow countrymen who said that'the British have the rigidity of red hot pokers without their warinth.”' Both men agreed to consign their vitriolic exchange ”to the flames” so that it would not, someday, turn up in the Company Archives. When Amory made that request of Murray, who had been sent copies of the correspondence, the Managing Director enthusiastically agreed. ”Your 'for the fire and ashes' exchange of letters with David Kilgour was waiting for me when I got home. Thev are returned for shredding in Mrs. Harron's hungry fittle machine,” he wrote to the Governor.
There remained only the matter of choosing an appropriate farewell gift to the departing Canadian Chairman. Having been asked what he would prefer, Kilgour suggested a Canadian painting and a trip to the Arctic with his wife, Mary. In response, Murray immediately set a $2,000 limit on any canvas that might be purchased and had cost accountants do runs on what kind of expense would be involved in the northern expedition. ”I am not too happy to have Mr. and Mrs. Kilgour go on a working trip,” he wrote to Amory, ”since [his] views on the English directors are so embit- tered. . . . I would prefer to see him go on a goose hunt in our Grumman Goose.”
Kilgour was not thrilled about the wild-goose chase because he was told he couldn't take Mary along, and suggested that the two of them accompany a regular northern inspection trip. That idea threw Murray into a total panic. ”It is incredible,” he wrote to Amory, ”but he can be as difficult (almost) in retirement as he was before. He has written to request a trip to the North with his wife-we thought we had gone rather far with the Goose Hunt offer.”
Murray eventually got an auditor's opinion that any northern journey by the retiring chairman would be a CANADIAN AT LAST 459.
taxable benefit, and In a curt letter on July 8 he withdrew the offer.
Kilgour replied in kind: ”G.o.d forbid that I should be involved in over-generosity by the HBC. I am going north, but completely happily on my own, and a painting from HBC would, on reflection, not be something I would welcome-so please forget it.”
Kilgour's stormy departure left open the issue of who would succeed Am~ory and become the Company's first Canadian G overnor. The clear choice of board members had been Donald Gordon, the dynamic former Bank of Canada deputy governor and chairman of Canadian National Railways, who had joined the HBC board in 1967. But he died within two years of his arrival, and the Bay insiders had to look elsewhere. In 1970, after only three hundred years, the Hudson's Bay Company recognized the existence of Toronto and appointed its first director from that trading post, A.J.
MacIntosh, a senior partner in Blake, Ca.s.sels & Graydon. And it was from '16ronto that the majority of the British directors wanted to recruit their first Canadian Governor. He was Allen Thomas Lambert, the high-school drop-out who had oined a Victoria branch of the Bank of Toronto at sixteen and was now chairman of the Toronto-Dominion Bank.
”Lord Amory approached me and it was not something vou would turn aside lightly,” Lambert recalled. ”I would have had to give the Company at least 40 percent of iny time and I wasn't able to resolve in my own mind how I could do that and still be fair to the bank.” Other suggested candidates included Senator Hartland de Montarville Molson, the former chairman of his family's brewing company, and Major-General A. Bruce Matthews, chairman of Excelsior Life Insurance, but in the end the job went to yet another Winnipegger: George Taylor Richardson.
The sixth Richardson to head the family business, he was a tall, imperial man who exuded a kind of easy 460 MERCHANT PRINCES.
inst.i.tutional grace. Although he seemed on the surface to be the ultimate corporate bureaucrat, whose proudest boast was how many members of his companys twentyfive-year Club were third-generation Richardson employees, there was an adventurous side to him as well, known only to his closest a.s.sociates. An experienced helicopter pilot, Richardson would guide his Bell Jet Ranger across the Canadian landscape, swooping down on some lonely IIBC post, skimming over the nocturnal terrain of the endless prairie, following the moving lights on highways and train tracks, hopping across the Rockies, and finally, like some giant mechanical hummingbird, dip his skids in the Pacific. A Bay man even as a youngster, Richardson ran a trapline near his old family home on St Mary's Road at St Germain, near Winnipeg, catching and skinning ermine, mink and the odd coyote, which he sold to the I] BC. He lived there with his elegant wI fe, T is, hunting, riding his horses and puffing his arm] I Rea Belvedere cigars--guarded all the while by a rainbow of peac.o.c.ks, gugalating trumpeter swans and a domesticated flight of ptarmigan.
The governance issue having been settled (though Richardson was not sworn into office until November 26, 1970), the Canadianization of the Company moved into its final phase. The cabinet in Ottawa had stamped the terms of the transfer (including a five-year, 10-percent owners.h.i.+p clause) on February 26, 1970, and two months later Lord Amory had received notification from the U.K. Treasury approving the move. On May 28, the British proprietors convened at Beaver House for the last time. The I]Bc had been founded on May 2, 1670, in Whitehall Palace, when Charles 11 handed Prince Rupert the Charter, naming him and his fellow Adventurers ”true lords and proprietors” of all the sea and lands of Hudson Bay and its drainage system-a grant that turned out to enclose a land empire of 1.5 million CANADIAN AT LAST 461.
square miles, 40 percent of modern Canada plus several states of the northern United States. Now, three centuries later, the Company still mattered (it ranked fiftysixth among U.K. firms in 1970) and, more than that, its uninterrupted existence was a reminder of the days when Britain had been great-just as its departure served notice that Britain was not quite so great any more.