capital, however, played havoc with Van Horne’s plans to forge ahead steadily with branch-line construction. The cash shortage can be attributed partly to his lack of foresight, but that is not the entire explanation. In the post-1902 years other factors were also at work. One of these, of course, was the 1903 recession. Another was the insurrection that erupted against President Estrada Palma’s administration in 1906. This uprising scared away investors and precipitated a drought of investment capital.
Notwithstanding all the setbacks, by June 30, 1910, the railway boasted eight branches in addition to its main line. Included in the company’s rolling stock were sixty-five passenger cars, but as yet no dining cars. Until these arrived, passengers took their meals at picturesque little restaurants that had been designed under Van Horne’s supervision. Not surprisingly, he looked to Cuba’s rural architecture for his inspiration for these designs.
Towards the end of his life, Van Horne admitted that Cuba had involved him in far more work and worry than he could have imagined when he began the railway project there. Although the admission was painful, he also confessed that he had yet to reap any return on the large amount of money he had invested there between 1900 and 1909. Nevertheless, he took comfort in the realization that he had been of some use in “helping the people of that lovable island.”
As for the Cuba Company’s shareholders, they did not reap much in the way of returns before Van Horne’s death in 1915. Success would come only after the First World War destroyed the European sugar-beet industry, and the price of Cuban sugar skyrocketed from two cents a pound to twenty-three cents.
11
Chasing the Money
“Mackenzie thinks there are ‘millions in it’ if we can get it into reasonably secure shape,” a jubilant Van Horne wrote to his friend General Russell Alger in 1898. “It has been a long hunt and we mustn’t miss it.” Although Van Horne was writing about the scheme to electrify Havana’s tramway system, he could have been referring to any of the numerous other overseas and Canadian projects he became involved with after he resigned from the CPR.
In these final years of his life, Van Horne dedicated himself to making money and savouring the excitement that comes from discovering new opportunities for doing so. Unlike some financiers, he found no joy in stuffing securities away in a safe. For him, money was a means to an end, a way to renovate houses, perhaps, or purchase works of art. He became involved in a staggering number of companies: by some estimates he was a director of at least forty companies, and he invested in countless more. In addition, he played an active role in the management of several enterprises — of which the Cuba Company was the most conspicuous.
From the early days of his career, Van Horne had been a capitalist who venerated the business corporation — he regarded it as the foundation of modern civilization. He once told Sir John Williston that corporations “have souls — composite souls — larger and purer than any individual soul that ever was or ever will be.” He added, “I have sat at the Directors’ table in corporations for many years and have yet to hear the first deliberately mean suggestion on the part of a Director on any matter of policy and have yet to see the first case in which, as between two lines of policy, the fair and liberal one was not adopted.” Van Horne agreed that corporations should pay “their fair proportion of taxes,” but, he argued, they “should be taxed precisely the same as individuals are taxed.” He saw no valid reason “for making them pay for the privilege of being a corporation, for that privilege is a public necessity and a public good.”
From his early years in the United States, Van Horne was always on the lookout for legitimate ways to make money, and he eagerly seized on investment tips his friends and colleagues provided. These he supplemented with the latest business news he gathered via the telegraph. The returns from his real-estate properties and eventually from his extensive holdings of CPR shares, coupled with his large CPR salary, enabled him to amass a fortune. As a dedicated capitalist, he devoted himself unreservedly to nurturing this fortune and making it grow.
Fortunately for Van Horne, his move to Canada opened up an abundance of investment opportunities, particularly after he left the CPR at the turn of the twentieth century. In these years the Canadian economy moved out of a depression into a period of unprecedented growth, which lasted, with only two minor interruptions, until 1913. During these buoyant years Canada grew faster than any other nation, the United States included. Practically every Canadian indicator soared upward — population, railway mileage, exports, construction, and number of homesteads.
In investing his money, Van Horne always looked to railways, real estate, and companies with tangible assets or intrinsic value to bring the returns he wanted. His real estate holdings included a building in Vancouver and shares in the Montreal Land and Improvement Company and the Winnipeg-based Norwood Improvement Company. Outside the CPR, however, his railway investing was confined to offshore railways, largely in Central and South America. He also invested in a number of Canadian companies that had a product to sell. He succeeded so well that, before he died, Van Horne was recognized as a multimillionaire and one of the most influential businessmen of his generation.
Van Horne began purchasing stock and dabbling in real estate when he was still a young man making his way up the railway hierarchy in the United States. His participation in the business world took on a new dimension, however, in 1894 and 1895, when he became actively involved in organizing the Canadian Salt Company. In due time, this company would carry on business in Windsor, Detroit, and Sandwich. Although Van Horne was still president of the CPR, it eagerly supported this initiative and set out to secure its own share in the Ontario salt traffic. Van Horne would remain president of Canadian Salt until his death.
In the closing years of the nineteenth century, Van Horne also threw himself into the organization and management of several other companies. One of the most prominent among them was the Laurentide Pulp Company (later Laurentide Pulp and Paper), located in northern Quebec. He was drawn into this venture by General Alger, who had made a fortune in the lumber business before becoming secretary of war in William McKinley’s cabinet. Alger wanted a group of Canadians associated with him in the enterprise, so he invited Van Horne to become a company director. Van Horne, in turn, wanted to generate more traffic for the CPR, which had a branch line running northward from Trois-Rivières. He was also more than happy to make additional money for himself.
Before long, Van Horne became Laurentide’s president. As such, he took an active interest in the erection of pulp mills and power plants and in the production and sale of the company’s product. He sank a lot of his own money into it and persuaded a large number of his friends to become investors. The calamity-prone company suffered one setback after another, but in 1902 Van Horne took steps to reverse its fortunes. He reorganized the company and, using a newly discovered process, focused it on the manufacture of paper. Van Horne also took on the laborious task of trying to raise additional capital and, by 1910, the company’s prospects had improved so dramatically that it was paying an impressive annual dividend. Five years later, Laurentide Pulp and Paper was the largest paper-making concern in Canada — and Van Horne was considered the “Dominion’s greatest business authority on the pulpwood question.”
Reorganizing Laurentide should have been challenging enough, but Van Horne, Alger, and some of the company’s other investors established related undertakings in the Maritimes. One of these was the Grand Falls Water Power and Boom Company, located in Grand Falls, New Brunswick. When describing its potential to Alger, an ecstatic Van Horne wrote, “The water power company at Sault Ste. Marie are expending $3,000,000 to get forty thousand of horse power, while we will have at Grand Falls nearly twice the power at a good deal less than one-tenth the cost.” Van Horne and his associates planned to erect a paper-making mill whose eventual capacity would make it “by far the largest paper mill
