Why Mexicans Don't Drink Molson

by Andrea Mandel-Campbell

  Considered one of the fathers of Canadian mining, Lindsley was a driving force in the development of a half dozen major mines in Canada, including the Giant mine in Yellowknife and the Yukon’s United Keno Hill. He was also behind the development of an ore body staked in the harsh Canadian Shield of northern Manitoba by a young American-born trapper and prospector, Carlton Sherritt. Just five years after striking it rich, Sherritt died when he fell out of his brand-new plane shortly after taking off from The Pas. His name, however, would live on in Sherritt Gordon Mines and the town of Sherridon, where he made his fortuitous strike.

  About 150 kilometres southwest of the newly sunk Sherridon mine, another copper deposit was coming on stream under the aegis of Cornelius Vanderbilt Whitney. The rough-and-tumble town of Flin Flon was as incongruous a place as any for the scion of American wealth and aristocracy. Cornelius was the son of Gertrude Vanderbilt Whitney, heiress to the Vanderbilt railroad and shipping fortune and founder of the Whitney Museum of American Art in New York. Cornelius’s paternal family were fabulously wealthy thoroughbred horse racers whose ancestors included Eli Whitney, the inventor of the cotton gin.

  A prodigious talent in his own right, Whitney was co-founder and chairman of Pan American Airways, wrote several books, produced the Hollywood blockbusters Gone with the Wind and A Star Is Born and served as U.S. assistant secretary of the air force and undersecretary of commerce.

  Perhaps it is not surprising then, when, in 1928, a group of American engineers approached him with the idea of developing a vast, low-grade ore body, far from railway links or hydroelectric power, he took them up on it. The property had languished for more than a decade, but within three years of incorporating Hudson’s Bay Mining & Smelting, Whitney had an operating mine, smelter, hydroelectric dam and railway link.

  One of the other great mining landmarks of the 1920s was the creation of Placer Development. Unlike the other mining companies being built at the time, its founders were not American, nor were its mines, at first, in Canada. Charles Banks was a British-educated mining engineer from New Zealand, whereas Addison Freeman was an Australian with American business connections. The two entrepreneurs incorporated the company in Vancouver to take advantage of favourable tax laws and immediately set out on a risky venture to dredge alluvial gold on the other side of the world, in New Guinea. From the South Pacific the company moved to South America, only entering British Columbia in a significant way much later. In 1987, it merged with Dome Mines to form Placer Dome.

  So whether it is inco, Noranda, Falconbridge, Sherritt Gordon or Placer Dome, just about every major Canadian mining company is the product of foreign, mostly American, investment. And it’s the same story with steel. The great blast furnaces that became the hallmark of Sydney, Nova Scotia, and the countless coal mines tunnelled below Cape Breton were the domain of H.M. Whitney, a Boston industrialist who had made his fortune building streetcars. In 1899, Whitney, with government aid, built the first modern blast furnace and open hearth in Canada. In 1921, Nova Scotia’s various steel and coal properties as well as its shipyards were merged and modernized under a British-backed syndicate headed up by Roy Wolvin, an American-born shipping expert whose brutal clampdown on striking steelworkers earned him the dubious moniker “Roy the Wolf.”

  While Wolvin would go down in Nova Scotia history as a rapacious capitalist, another American steel promoter would be hailed as one of Canada’s greatest captains of industry. Francis Hector Clergue, a charismatic entrepreneur from Maine, had tried his hand at streetcars, mountain-top resorts and a railway across Persia, with varying degrees of success. In 1894, on hearing of an opportunity to buy a hydroelectric company at Sault Ste. Marie, the intrepid promoter, backed by a group of Philadelphia investors, made his way into the backwoods of Ontario.

  The utility became the basis of an entire complex of industrial ventures. Clergue used the power to fuel a large pulp mill, machine shop and foundry, and then set his mind to exploring for minerals. His iron ore mine became the largest in Canada, and he not only built a railroad and lake freighters to move the ore, but a huge iron and steelworks at Sault Ste. Marie. In 1902 Algoma Steel rolled out the first steel rail ever made in Canada. Clergue had taken on the steel supremacy of Pittsburgh and Birmingham, accomplishing what no Canadian steel producer had ever dared. As historian Michael Bliss noted, “The irony of course was that Clergue, an American, had had more faith in Canada than the Canadians themselves.”79

  Clergue’s steely tenacity would be matched by another American, Clifton W. Sherman, a foundry manager and son of a Pittsburgh blast furnace superintendent who moved to Hamilton from Buffalo. In 1912, Sherman was in his forties and had no business experience, but it did not stop him from launching the Dominion Steel Casting Co. — better known today as Dofasco.

  Hamilton’s other major steelworks, Stelco, was the product of an amalgamation in 1910 of five separate companies, orchestrated by New Brunswick–born Max Aitken, whose brilliant financial machinations later earned him the title of Lord Beaverbrook. Needless to say, several of the companies had American underpinnings. Stelco’s main Hilton Works foundry was originally developed by a group of New York industrialists and bankers attracted to Hamilton by the promise of free land and a two-dollar-per-ton bonus on pig iron.

  Canadians would take an equally complacent, almost expectant, attitude to the development of other resources, from lumber to aluminum, although when it came to oil they were simply overwhelmed, at least at first. The tariff protection offered to Ontario’s small independent oil producers was no match for John D. Rockefeller, the billionaire oil tycoon. His Standard Oil flooded the Ontario market and in 1898 bought Imperial Oil of Canada, the last redoubt of domestic producers.

  Imperial opened Canada’s first service station in 1907, built the nation’s first pipeline and for years enjoyed a virtual monopoly over oil refining. In 1947 it struck oil at Leduc, Alberta, marking a watershed in the province’s development. The discovery sparked an influx of foreign oil giants in the 1950s and 1960s, and by the early 1970s, 90 per cent of the oil and gas industry was foreign controlled. In fact, most major independent Canadian oil producers operating today — Nexen, Talisman and Suncor — are spin-offs of foreign multinationals.

  Although oil had not yet been discovered in neighbouring British Columbia, its lush forests also drew foreign corporations and fortune seekers. The once-mighty lumber giant Crown Zellerbach, based in San Francisco, moved north in the early 1900s, eventually building pulp and paper mills in Campbell River and Ocean Falls. Columbia Cellulose of New York built the Prince Rupert pulp mill, while Bloedel, Stewart & Welch, a family company operating out of Washington state, developed the Port Alberni mill.

  Walter, Leon, Otto and Theodor Koerner, Czechoslovakian Jews who rebuilt their family lumber empire on Vancouver Island, were among a wave of Europeans to escape to the B.C. coast in the wake of World War ii. John Prentice and L.L. “Poldi” Bentley founded Canadian Forest Products soon after arriving from Austria. The company, better known today as Canfor, is Canada’s largest softwood producer. Prentice and Bentley were followed by three brothers, Samuel, Henry and William Ketchum, who made their way up to Vancouver from Washington state in 1955 in search of a new source of lumber for their family-owned wholesale business. Their West Fraser Timber is now the third-largest lumber producer in North America.

  Of course, the history of British Columbia’s forestry industry would not be complete without mentioning Harvey Reginald MacMillan, the hard-driving lumber baron who built the largest integrated forest-products company Canada had ever seen. Unlike so many of the country’s industrial leaders, MacMillan was Canadian, born on a farm outside of Toronto, poor and fatherless from the age of two. But what really made him different, especially from his own countrymen, was that he travelled.

  The B.C. industry was heavily reliant on U.S. brokers to sell its wood, and with the outbreak of World War I there was concern that it would become particularly vulnerable to a
wartime disruption in trade. The provincial government decided to send out its chief forester — MacMillan — to gain firsthand knowledge of world markets. He toured the globe, visiting Britain, South Africa, India and Australia, and quickly saw the money to be made by coordinating the sale of lumber on international markets. In 1921, he founded his own shipping company, and by 1928 H.R. MacMillan Exports controlled a quarter of British Columbia’s lumber exports. When the company merged with Bloedel, Stewart & Welch Ltd. in 1951 to form MacMillan & Bloedel Ltd. (later MacMillan Bloedel), it was one of the largest forestry firms in the world.

  MacMillan’s iconoclasm, compared with the predominant Canadian tollbooth mentality of collecting fees on foreigner investors, is underscored by the long-obscured origins of Alcan, the country’s multinational poster child. With operations in thirty-eight countries dating as far back as the 1920s, the world’s number two aluminum producer is Canada’s most global company— except for the fact that it was never really Canadian.

  Much like Nortel, which started out as a manufacturing subsidiary of at&t, the U.S. telecommunications giant, Alcan traces its roots to the Aluminum Company of America, Alcoa, the world’s largest aluminum producer. In 1900, Alcoa built its first Canadian aluminum smelter at Shawinigan Falls, Quebec, followed by a massive aluminum and hydroelectric complex at Arvida on the Saguenay River in 1925. Three years later, Alcoa spun off its Canadian and other non-U.S. operations into a separate unit, which remained firmly in the control of Alcoa shareholders.

  Alcan’s first president until 1947, Edward K. Davis, was the brother of Alcoa’s founder and chairman.* He and his key corporate lieutenants were Americans who not only managed the company from New York and Boston, but were behind its expansion into the United Kingdom, Germany, China and Australia. Nathaniel Davis, who succeeded his father Edward, serving as president for thirty-two years until 1979 and chairman to 1986, is credited with spearheading Alcan’s most ambitious international expansion and steering the company into an era of unparalleled growth.

  In 1950, an anti-trust suit in the United States forced the largest shareholders of Alcoa and Alcan to dispose of their stock interests in either one or the other company. However, the control and management of Alcan remained heavily influenced by Americans, and it does so to this day. Until stepping down in October 2005, Alcan CEO and president Travis Engen, an American, regularly flew into Alcan’s Montreal headquarters from his home in Connecticut. He was replaced by Richard Evans, who was born in Oregon.†

  Of course, the question that begs to be asked is, why were so many of this country’s greatest industrial achievements, from Alcan’s immense aluminum smelters to hardrock mining towns in northern Manitoba, built by Americans? Many Canadians, fed on a steady diet of veiled envy masquerading as derision, would say: greed. It surely played a part, but it doesn’t explain why more Canadians did not exploit the many opportunities Canada had to offer.

  Part of the answer may be found in the story of Joseph H. Hirshhorn, whose rags-to-riches saga serves as a cautionary tale for Canada’s future ambitions. A Latvian Jew, Hirshhorn immigrated to the United States as a boy, selling newspapers on the streets of Brooklyn to support his impoverished family. He became a messenger boy on Wall Street and, before long, had made his first million. But it was in Canada where his immense fortune was truly made.

  In 1933, Hirshhorn trumpeted his arrival in Canada by taking out a full-page ad in the Northern Miner newspaper, proclaiming: “My Name is Opportunity and I am Paging Canada.” It was money well spent. He went on to finance the discovery and development of the Blind River uranium fields north of Lake Huron, Ontario, as well as uranium and gold and copper mines in northern Saskatchewan.

  Hirshhorn used his vast wealth, literally dug out of the Canadian Shield, to assemble one of the world’s largest private collections of modern art. In 1966, he donated the entire collection, some six thousand works, to the U.S. federal government, which agreed to build a museum to house the stunning array of Rodins, Picassos, Matisses, Gaugins and Pollacks on the National Mall in Washington, D.C.

  In a speech marking the 1974 inauguration of the internationally renowned Hirshhorn Museum, the aging tycoon told an audience, “It is an honour to have given my art collection to the people of the United States as a small repayment for what this nation has done for me and others like me who arrived here as immigrants. What I accomplished in the United States I could not have accomplished anywhere else in the world.”

  In an ironic twist, Hirshhorn appeared to have forgotten to what nation he owed his good fortune. But the truth is, he had not. Hirshhorn had tried to donate at least part of his collection to the Canadian government, but was politely rebuffed. The Canadians, he later told an archivist with the Smithsonian Institution, were unwilling to build even an additional wing, never mind an entire museum, to house the sculptures and paintings. Sadly, his contribution to the National Gallery of Canada in Ottawa is a single work by Albrecht Dürer, entitled Nude Woman with Staff.* As Hirshhorn explained about Canadians, “They’re not spenders.”80

  THE OUTSIDERS

  Amid the jumble of crumbling tenements, richly ornate colonial cathedrals and grimy art deco buildings, the sleek glass and mirror contours of Latin America’s highest office tower pierce the heart of downtown Mexico City like an obsidian sword hilt embedded in its ancient foundations. On the opposite bank of Paseo de la Reforma, the capital’s wide imperial avenue, the tower’s naked ambition is juxtaposed with the discreet sophistication of the Four Seasons Hotel, its inner courtyards of burbling fountains and bougainvillea a sanctuary to visiting Wall Street bankers and London fund managers.

  While dramatically different in tone and tenor, the two landmarks share more than the same city block. They are both the work of Canadian entrepreneurs who have left their mark in the annals of international business. The fifty-five-storey Torre Mayor is the construct of Paul Reichmann, the indomitable real estate developer whose Olympia & York was at one time the largest real estate company in the world. The Four Seasons is the magnum opus of Isadore Sharp, dubbed “Razzle Dazzle Issy” for launching the world’s leading luxury hotel chain.

  With buildings and iconic brand names recognized the world over, both men eschewed the Canadian ethic of “domesticity by default,” earning them a spot among the country’s small but impressive pantheon of multinational pioneers. While many blame the Americans, the conservative banking system and stifling government paternalism for quashing the country’s entrepreneurial spirit, the pair are part of a group of brash visionaries who overcame the obstacles to embrace the world’s wider possibilities.

  What made them different? Well, for one thing, they were, without exception, not part of the “Canadian Establishment.” Despite their immense wealth, the members of the Anglo-Scots commercial class of Toronto and Montreal were strangely absent from risky international ventures, moving instead among the intermingled boards of various banks, life insurers and railroads, their entrepreneurial energy employed in a complex machination of government favours, American money and tariffs. It was those left out of the cozy club who would conquer the world. I call them The Outsiders.

  A few, like Roy Thomson and Laurent Beaudoin, emerged from the obscurity of small-town Canada to launch global companies. The $30 billion Thomson Corp., whose modest beginnings can be traced to a radio station in North Bay, Ontario, and a local newspaper in neighbouring Timmins, is now the third-largest provider of financial data after Reuters and Bloomberg, reaching twenty million people in 130 countries. Beaudoin took his father-in-law’s snowmobile invention and turned Bombardier, based in Valcourt, Quebec, into one of the world’s top manufacturers of planes and trains.

  But overwhelmingly, Canada’s first internationalists were immigrants and Jews, or what Milton Parissis, a Toronto-based international turnaround specialist, refers to as “ethnics.” “International trade in Canada was spearheaded by the ethnics. They knew what the rest of the world had to offer and they were willi
ng to pay the price,” says the Greek-born Parissis. “The biggest teacher in life is pain. It makes you learn a lot faster. I don’t advocate it, but it sure as hell works.”

  Life certainly was not easy for Samuel Bronfman, born at sea, on a ship bound for Canada, after his parents were forced to flee the pogroms of czarist Russia in 1889. The pugnacious overlord of the Seagram liquor empire, Bronfman was surely driven to succeed by his family’s struggle to survive in the foreign and unforgiving cold of the Prairies. Arriving as homesteaders in Wapella, Saskatchewan, the family’s efforts to grow tobacco and wheat failed, and they were forced to move to Brandon, Manitoba. They lived in a shed while Sam’s father, Ekiel, worked in a sawmill, peddled firewood and whitefish and even rustled wild horses to feed his eight children.

  Eventually, the Bronfmans bought a string of modest hotels in Manitoba and Saskatchewan, catering to the new settlers and railway workers who were opening the West. But as the temperance movement began to take hold, the family turned their attention to whisky. Sam opened a liquor store in Quebec, where alcohol was still legal, launching a booming mail-order trade. When Ottawa banned interprovincial trade in liquor two years later in 1918, Sam and his brothers jumped on a loophole in the law that allowed pharmacies to dispense alcohol for medicinal use. They immediately set up a pharmacy in Yorkton, Saskatchewan.

  By the time the United States ushered in Prohibition, the Bronfman (a name that literally means “liquorman” in Yiddish) family had a string of liquor warehouses, known as “boozoriums,” skirting the U.S. border. Sam and his brothers made a fortune reputedly selling whisky to American bootleggers and crime bosses, and by the time Prohibition ended in 1933 they boasted the largest reserve of aged whisky in the world. “Mr. Sam,” who emerged as the head of the family business, never looked back, buying distilleries in the United States and the West Indies and international brands like Mumm’s Champagne and Chivas Regal scotch while cultivating a stable of high-end Seagram label liquors, including V.O. and Crown Royal. Under Sam’s command, Seagram sold 1.5 million bottles of liquor a day in 175 countries.