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Sir Hugh Allan, shipowner and capitalist

Issue 1: Article 6: Sir Hugh Allan

A remarkable Scot who became an even more remarkable Candadian


(This article first appeared on http://www.clydeshipping.co.uk)

On 22nd April 1856, the small (by today's standards), steam ship ss NORTH AMERICAN left the quayside in Liverpool, bound for Londonderry then to cross the cold Atlantic to Quebec and Montreal. On board would be excited passengers, but also, crucially, the mails from Britian to Canada.

This followed Hugh Allan's successful winning of the contract to carry mail. Previously it had been Samuel Cunard's company's ships, winning the contract despite Allan initiating the idea with the government in the first place. Allan put together an impressive company, backed with money from family in Scotland and his chagrin must have been great. He did not have to wait long, Cunard's venture was a flop.

Much is known about Cunard, and he is arguably more famous than Sir Hugh Allan, but Allan was a remarkable man, and this anniversary gives me the chance to redress the lack of exposure given to him, especially in his native country of Scotland.

Born in Saltcoats on 29th September 1810 he was the second son of five sons born to Alexander Allan and Jean Crawford. This family were well known shipowners, J & A Allan, formed by his father and elder brother James. At the age of 13 he was working in counting house of Allan, Kerr & Co in Greenock but at 16 he emigrated to Canada, in 1826 to become a clerk with William Kerr, the grain merchant. This he did until 1830 when he undertook a 'Grand Tour', around Canada, thence to New York, back to Scotland and finally his first visit to London.

When he returned to Canada in 1831 he met up with James Millar, an agent for J&A Allan and joined his company which was a general importer based in Montreal. Young Hugh, helped along by family connections, soon grew in stature, involved in shipping, shipbuilding and grain importing. By 1835 the company was known as Millar, Edmonstone & Co and Hugh was made a partner. His father encouraged him and the company in expanding the shipping side of the business and J&A Allen became closely involved in building up the merchant fleet. By 1839 his brother Andrew came across the pond to join him, the firm was called Edmonstone, Allan & Co and was the biggest shipping company in Montreal, trading between Glasgow and Canada, losing the name Edmonstone in 1863 and become part of the Allan empire, trading as a segment of J&A Allan as H&A Allan.


Fairlie House, on the Fairlie Estate where 'Sandy' Allan's carpenter father had a small cottage

As President of the Montreal Board of Trade, a post he held between 1851 and 1854, Hugh Allan urged the government to subsidise shipping services between Canada and Britain, arguing that no only would this ensure regular and permanent mail services, but (and here we see the beginnings of his protectionist streak) it would ensure more immigrants to Canada and protect imports and exports that the many thought were threated by the Americans with their Drawback Laws of 1845.

He set about creating a company, carefully Canadian, but inextricably linked (and financed) by the parent company over in Scotland. It is also worthwhile noting that his Scottish links were not just across the ocean, surrounding him in this venture were mostly Scottish-Canadian entreprenuers and businessmen

Despite such a careful and experienced syndicate being formed, it was Samuel Cunard's rival outfiit, Canadian Steam Navigation Company, that secured the first mails contract in 1853. Their venture was not to perform too well.

Despite losing the contract, Allan knew the Cunard organisation would fail and so he and the syndicate turned their minds to improving their alternative service by commissioning new, Clydebuilt vessels. These were the CANADIAN and the INDIAN, built of iron and with screw propulsion, the latest in technology.On 18th December 1854 they formed themselves as The Montreal Ocean Steamship Company and a legend was born.

With the help of Conservative politicians, the new company wrested the contract from Cunard's and with a subsidy of £24,000 they ran a fortnightly service from Montreal and Liverpool in the summer season, and Portland, Maine and Liverpool in the winter. This was increased to a weekly service in 1859. By this time Allan's investment was reported as £3,500,000 - a huge sum of money in those days.

After winning the contract, other ships were ordered, including the one that left Liverpool today all those years ago.

But shipping mails wasn't all his company could do for the government, there were troops to move, supplies to convey and all manner of government contracts out there for the winning. Allan lost no time in woo-ing officials on both side of the Atlantic and secured many valuable contracts during wars in Africa and the Crimea. It was however a time when the halo of rectitude rather slipped, after Sir George Cornewall Lewis brought a suit against him for 'exhorbitant and enormous' charges for carrying military baggage five times the rates of other carriers. Hugh Allan responded vigorously - he impounded the baggage until the case was settled!

The company grew, taking immigrants and manufactured goods across to Canada, returning with natural goods such as grain from there to a needful Great Britain. By 1870 however, Allan was frustrated by the inadequacy of rail links to the western side of the continent, he was also worried that the railway company was getting to close to rival US shippers and there were expressions being made that the railway company wanted to set up its own shipping concern.

Accordingly he began again to subvert such rivalry and set about involving himself in the railway business, using his same mix of capital, personal contacts, and by now, his immense wealth, to insinuate himself and associates at all manner of levels to ensure his syndicate ruled the roost in the construction of new railways around the lands of North America. However, a rival syndicate sprang up, based in Toronto. It was formed as the Inter-oceanic Railway Company of Canada in 1872. Allan's was incorporated as the Canadian Pacific Railway.


Sir John A MacDonald (born 1815 in Glasgow, Scotland) - Canada's first Prime Minister

The latter, after much wrangling, after much political and private discussions, won the contract. It was also at a time of election. A Conservative government was returned...and it was Allan money that helped boost their fortunes. or so it was alleged, and finally those allegations were crystalised, when Lucius Seth Huntington MP, rose on the 2nd of April 1873 to make the charge that Hugh Allan had purchased the control of the western railway by giving enormous sums of money to the Conservatives. To cut a long story short, the scandal, which became known as the Pacific Scandal, brought down the MacDonald government and resulted in Allan being no longer involved in the Pacific railway.

Hugh Allan's interests covered much of Canada's banking systems. His most important involvement was when he established the Merchants' Bank of Canada in 1861. It opened for business in 1864, and as a matter of routine, he was elected President every year until 1877. He was however, re-elected in 1882, the year of his death.

An interesting insight into the character of the man - one so heavily involved in manifold interests, companies and ventures, is that while in Montreal he would go the Merchant's Bank every Saturday, there to supervise the burning of bills that were taken out of circulation and to count the money. It was as well he did, for on one occasion there was discovered a shortfall of £500. This resulted in the sacking of the seven employees and criminal proceedings against the head teller and accountant!

The Merchant's Bank was central to Allan's growing empire which included, shipping, insurance, manufacturing, cotton, railways, elevators and the Montreal Telegraph Company, ensuring capital was always available at a time of need, and that each company could help generate more business for the other.

However in 1877 the Merchant's Bank came close to collapse, mainly due it being discovered that Allan's announcements of profits every year were in acual fact as a result of carrying losses forward. Bonds were found to be practically worthless and a number of indescrepencies were found on further investigation. He resigned, bullishly maintaining this was all a connivence between 'a few brokers' and enemies of Allan's.

Allan's interests not only involved ownership, he also invested his wealth in capitalisation. In this field of endeavour the amount of industries and firms he had extensive investments in are almost too many to list. Tobacco, cotton, iron, textiles, coal mining, pulp and paper - the list is endless

The involvement with textiles showed him to be less than concerned about the textile workers. Many and vaious were the complaints about the conditions under which his workers laboured - from poor wages, to child labour, to industrial accidents. It was reported that ten year old girls worked barefoot in his mills through the winter. He was not a man Charles Dickens would have warmed to!


Crest of the Montreal Shipping Company

He was all in all a man concerned with wealth creation, retaining wealth, ensuring it went his way, and someone who wished to dominate and control his world, expanding its influence through politicians (notably Prime Minister Macdonald, who was one of his debtors - a circumstance Allan capitalised on cleverly), through the newspapers and through expert manipulation of others at all levels.

So successful was he in this that he became quite arrogant in his demands. He softened up local politicians and interests by advertising in their papers, giving relatively low ranking officials and representatives undue access to the cream of society, and then bluntly made his demands known.

For example whenever he found a law to his disliking, he simply let it be known, indeed, ordered it to be repealed. The Quebec politician Hector-Louis Langevin telegraphed Macdonald on one instance to say "Allan has telegraphed wishing the St Lawrence navigation act repealed. The Quebec government has promised it shall be done."

However, despite the criticisms levelled at him he was no more corrupt or devious than anyone else in positions of power and influence in Canada in those days. Other industrialists were equally manipulative and greedy, it was probably a bit like our generation in the 1980's, when greed and power and wealth accumulation actually became something almost honourable, and how you got it was your business - literally, your business.

His great fortune came to anything between $6 million to $10 million, he had extensive estates dotted all over the continent, he had his own private steam yacht. All the trappings of an industrialist and capitalist.


Ravenscrag, Sir Hugh's mansion in Montreal, named after one of his favourite childhood haunts in Ayrshire

That is what he shall be remembered as, but in his private life he showed his Scottish roots more pleasantly, being a curler, quite a notable one, he was president of the Montreal Curling Club in 1846/47 and again in 1874/75. He was also president of the St Andrew’s Society from 1848 to 1850.

Sadly, unlike another great Scottish industrialist, he was no Carnegie. Whatever benevolence came from the Allan empire, it was mostly relatively modest sums dispensed by his wife.

She died in 1882, and in 1883, back in Scotland to visit his son-in-law in Edinburgh, Sir Hugh Allan (as he was now, knighted by Victoria in 1871) suffered a heart attack and died. His body was taken to Montreal for his funeral, at which thousands followed the final journey.

He was one of Canada's most important industrialists, moreso, most important capitalist. Money was central to all he did, ensuring that capital stayed in his hands as often as possible as he lent it to those he did not own, and got it back with interest, as he carried his own goods on his own ships, as he sold clothes to his own workers, and those workers the very immigrants he had caried over the ocean, he ensured that the rule of success was to centralise power in a web of commerce and industry that affected everything from beginning to end.

In an age of Empires, he was a true Empire Builder.

FOOTNOTE:

At Clydeshipping.co.uk, Angus MacKinnon has written a very detailed account of the life of his father, Alexander (Sandy) Allan.

With thanks to Stuart Cameron who posted most of the above images on Clydesite

 


 

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