He dined at small restaurants with ordinary folk, had grand ideas, and lived in rooming houses with other small businessmen. His life at this time was taken up not only with making money but with making the lifeblood of money: the right contacts. Slowly he met the right people. Some of them even showed an interest in this brash young wheeler-dealer from the Miramichi. This was the life outside the manse. He tells us that when he was a boy he had romantic visions of the world, drawn from the tales of King Arthur. Perhaps in some strange way he saw himself as a prince conquering the world. If he did, he was about to conquer more of it than most. Alexander the Great, when told that greatness would befall anyone who could unravel the Gordian knot, simply took his sword and cut it. Max Aitken, like Alexander the Great, had one weapon with which to cut through the same sort of Gordian knot—his brash self-confidence.
CHAPTER FIVE
Mr. Stairs of the
Union Bank of Halifax
One day, while on a train to Halifax, Max sat down beside the owner of the Union Bank of Halifax, Mr. John Fitzwilliam Stairs, and tried to sell him a typewriter. There are other stories about how the two met, but I like this one best. Max, sitting there with a typewriter, that new-fangled gadget that would speed the process of writing tenfold. (Did he think it would make him a better writer? Of course he did; there was a crassness in his enthusiasm for newness.) Still, this must have been fascinating and ingenious, and anything new that was ingenious was glorious to him.
It is not reported if Mr. Stairs bought the typewriter. Probably not. But he was a very astute businessman who recognized Max Aitken as being the real deal. Max sold himself on that train to Stairs, sold his ability and his abundant self-confidence.
There is, however, another version of the story, in which Max, not being hired by Stairs, simply went to the Halifax office, sat down at a desk, and began to work. Stairs, at first angered, realized the potential of someone so daring and hired him. Either story—or a half-dozen others—will do.
The Stairs family controlled many profitable businesses, such as Scotia Steel, financial companies such as Eastern Trust, and Maritime industrial companies as well. They also sold securities in utility companies in the West Indies. All of this was endlessly intriguing to Max, who was for the first time introduced to the real workaday world of corporate enterprise, seeing how political and business antagonists worked, squabbled, and then, for the sake of money, put squabbles aside.
Max got on with Stairs, but not with others in the company hierarchy, who looked on him as an upstart and brash outsider. But this new world fit Max like a glove; he was aggressive and sure of himself and learned that he knew and could operate within the world of business. Max Aitken was more than willing to take chances the older generation would not.
“Stealing a bank”—as Max described it himself in My Early Life—was the work Stairs put him to. That is, John Stairs wanted to consolidate his family’s Union Bank of Halifax with a smaller bank in Windsor, Nova Scotia, and sent Max to find out if he could buy it out. Did he see the unscrupulous side of Max, and was he ready to use it? We do not know. Certainly he must have recognized Max’s talent for convincing people to do things they had not thought of doing before. And, lucky for Aitken, he lived in an age when we actually had enough moxie in Canada to allow private citizens a range of enterprise they have no recourse to now. It would be very difficult to be a Max Aitken now in New Brunswick. At any rate, it was not the case then that the restrictions on our own people precluded great enterprise.
But even in those days, not one in ten thousand would have been able to accomplish what Max Aitken did. Within three weeks, the bank in question was under Stairs’s direction, and Max took a ten-thousand-dollar bonus from the sale (or, at least, so he tells us). This was to be his first merger.
Over time, he would become one of the great merger manipulators in the world, wheeling and dealing with the most famous men of his time, using as his playing field both Britain and Canada. And it all started with trying to sell a typewriter.
NOW HE WAS on his way. At a time when most people earned perhaps eight hundred dollars a year, Max walked away, he states, with that ten-thousand-dollar fee. It was good money and, what was better, he had Stairs’s gratitude and trust. As ever, he enjoyed the gratitude, the trust, of older men, and needed their endorsements. Stairs did like him, and did help him to see the world from the top down. He would never have to look from the bottom up again.
“By hiring Max as his personal secretary, Stairs gave Aitken a personal and first-class introduction into the world of Canadian high finance,” writes Gregory P. Marchildon in his book Profits and Politics, the most extensive and best book on Beaverbrook’s financial genius.
So Stairs helped fund Max’s next venture: a finance and bond company. Stairs received a percentage of the profits, and Max, at least as he claimed, did all the work. He was now under the Stairs umbrella, the Scotia Group, which had vast holdings in banks, coal mining, farming, and utilities. Max began to look at doing business beyond Halifax, tending toward the West Indies. He had decided he was not ready for what he called “the Montreal or Toronto Sharks.”
Later, a biographer from Toronto would exclaim at how terrible it was for Max to say this, being as he was such a shrewd, wily, and underhanded shark himself. What was terrible? Was it that he said this, or that he was more of a shark than they? If he had failed, would their laughter at this country bumpkin have compensated him for his loss? What it does show, however, is to what degree he was considered an outsider.
He began investing in railroad and utility companies in Cuba and Trinidad and Puerto Rico. If a certain utility company he had his eye on wouldn’t allow his investment, Max would start a rumour that he was going to set up a rival company, which usually frightened the owners. His method was no more unscrupulous than a McDonald’s setting up beside a Burger King, or an Irving by an Esso. He was also not above offering bribes, in a country of bribe-takers.
Though he felt he was doing a man’s work, as Marchildon states, he was looked upon as John Stairs’s private secretary by other family members, even though John Stairs, up until his untimely death, included him in every major negotiation and, over the next few years, he would become very influential in directing the Scotia Group in its endeavours. By his proficiency, he would earn the trust of one Edward Clouston, president of the Bank of Montreal.
For a time, Max was headquartered in the grand Halifax Hotel—and for much of the rest of his life he would have private lodgings in hotels, where he conducted business and entertained. Hotels also seemed to be right for Aitken. From the days when he used to slip out from under the gaze of his parents and walk the streets of Newcastle, Max Aitken really had no home. Hotels were one way to show this, to intimate to others that he was a traveller. A traveller and a loner. That is why he ended up so far away.
Soon everyone had heard of him, and, as he was introduced about, by himself or by others, he met General Charles Drury, who had taken charge of the Halifax Garrison from the British—a very notable thing. One other notable thing about General Drury was his daughter Gladys.
CHAPTER SIX
Marriage
in the New World
From all accounts, Max married a wonderful woman in Gladys Drury. She brought with her an aura of charm and elegance, and her family brought connections in a higher society. The love between them was mutual—at least to the extent that Max could manage. (Of course he would be unfaithful most of his life, and liked to promote the idea that he had married her for her name.)
He married someone who knew society as he never had, and she married a man—“the small fellow with the big head” as one Montreal banker described him about this time—who knew modern enterprise like few men in the world, and had a limitless faith in his own ability.
To say that he benefited from the marriage by marrying money (as some do) is in the end as pointless as saying that her father approved of the match only when he discovered Max to
be a financial genius. (Her parents did not attend the wedding.) When he married Gladys, he was already earning more in a year than most of her other suitors could ever hope to in ten. That, of course, is not suggesting that money was the wand that changed him from Frog to Prince. Many close to Gladys disapproved violently of Max on a more personal level. The man lived in a hotel, and was a wheeler-dealer, for God’s sake! What is more, I am sure Max was aware of this. He knew his faults and often embellished them himself. And perhaps he would never have considered taking a wife who could not be a ready benefit.
Still, was it uncommon for a man to benefit from a marriage in that closed society? Herbert Asquith, who would become Liberal prime minister in Great Britain at the start of the First World War and a strong political rival of Max Aitken, had done just that when he married his wife, Violet. In fact, in the genteel society to which many people, and many Canadians, felt that Max shouldn’t belong, it was done all the time.
They went to Cuba on their honeymoon, where he worked out a deal to buy a tram line.
IN 1904, John Stairs died at the King Edward Hotel in Toronto, creating another vacuum in Aitken’s life, and Max was not made a director of the finance and bond company, Royal Securities, as he had been promised. Again, he says, he felt betrayed, but there are indications that he did not expect to be made a member of the board. However it went, he inspired more fear and distrust than other men. Perhaps he could not help this.
Still, he was also inconsolable at the death of the man he called “my hero.” In private he sought sympathy, ironically enough (or maybe not), from Charles Porter, a music director at the Presbyterian college in Halifax, who, far from giving sympathy, attacked him for thinking he was something more than “an ordinary insurance salesman.” It seems to me that Max often relied on stuffy moralizers to assure him he was being good or bright or clever. But once they told him he wasn’t being good, he would turn with wrath against them. This, in fact, was something of a constant pattern in his life.
Most in Halifax believed that John F. Stairs had protected his young charge, and now that Stairs was gone, they hoped that Max would flounder badly. In fact, of all the men who had helped him, Stairs had provided the greatest leg up. Yet Max was in many respects the most forward-thinking and aggressive business partner in Stairs’s group, and had brought it a good deal of financial success. At the time of Stairs’s death, he was in a struggle to save the Scotia Group’s People’s Bank of Halifax from being sold to the Bank of Montreal for a bargain-basement price.
That was Max’s curse: the juggernaut against him—the hope of much less worthy men that he would fail. (“He was pulled out of the gutter by John Stairs,” said one disgruntled businessman about this time.)
So Max left Halifax behind, some time after his marriage, and took up residence in Montreal.
He was on his own again, and by 1908, with the birth of daughter Janet, a young family man. But his older mentors, none of whom were as intelligent as he was, had nonetheless acted as true moral stabilizers on his robust enthusiasms and somewhat delinquent personality. Unfortunately, not only he but others too were soon to realize this.
CHAPTER SEVEN
The Great Canadian
Cement Caper and
the CPR
Montreal. A great place for a Canadian Scotsman then. A city of lights and ladies, fine dining and moneyed gentlemen. Perhaps he was thinking of never going any farther. This was the top in Canada—and for some reason he never felt comfortable in the States, though he had made financial gains there when he was with Stairs. He made money in Montreal, took over Montreal Trust, and after a time bought out Royal Securities in Halifax, which he and Stairs had set up.
“Royal Securities was me,” he stated.
He hired young men as ambitious as he was, like Arthur Nesbitt and Izaak Walton Killam, to handle his Maritimes affairs. (Killam and Nesbitt would become famous financiers in their own right.) Blake Burrill worked for him as manager of the Royal Securities office in Halifax. Aitken was a hard and unreasonable taskmaster. He knew most of the major players in Canada, and associated with many from Boston and beyond. I think there would be little dispute that, in his twenties and thirties, he was at the height of his genius.
Yet he was morally on his own. And this was a bad thing, for Max and morals collided often enough. It seems he had had his fill of those when growing up, and saw the hypocrisy that could lie behind them. This was unfortunate, for his wife, Gladys, was dependent on him for love and protection, and it seemed that the prankster in his personality always came to the fore when she could least afford it emotionally. He felt she nagged and smothered him, and wanted too much attention. They argued over this, and I suspect she was frightened of him (most people were).
So he took his own apartment, again in a hotel, and she returned with Janet, to Halifax. They lived apart for a time—and it would become a standard condition of their marriage. Though never divorced or legally separated, he would live on his own, she at home with the children.
I am sure he believed he was brighter than most men on earth—a very dangerous thing to believe even if one is brighter than most men on earth. I am also sure his ruthlessness was in part intellectually based. For once he ascribed nothing to chance or luck; once he realized the limitations of his reverend father, this meant that to be master of his own fate, he must do unsavoury things in order to succeed. For if you think of certain actions, seeing success as your only goal, and do not do them, more fool you!
Yet, if Max was ruthless, there wasn’t a parson in the world who could be more generous, even if they had the funds. There is a great story about him at Saint Mary’s Hospital in England. He was asked if he could help build a wing on this hospital. He went to visit and, while he was sitting in the cafeteria, he was approached by an elderly lady attendant. She told him that the tea and biscuits were a penny halfpence but, if he couldn’t afford it, she would give them to him free. Max was delighted, and wrote a cheque for £63,000 for the hospital wing.
CEMENT IS WHERE he made his initial fortune—and where people who dealt with him say he stole it. Stole is a harsh word. Was he unethical? Most likely, he was—but was he really and truly dishonest? Probably no more so than his adversaries.
In 1909 his finances were basically secure. He was on a roll, and he had a name, even if it was a name that wouldn’t recommend him to each and all. (He was refused entrance into an exclusive Montreal business club that year, because of his bad reputation.)
He told his biographer, A.J.P. Taylor, that he set out to buy the English-language Montreal Gazette, for which he had once worked as a correspondent. Max said he was stopped by the Bank of Montreal and by the influential board members of the Canadian Pacific Railway, who did much business with the bank. Max was known as a young and brash Conservative financier and industrialist, untrustworthy, impetuous, and shamelessly given to acquiring companies for the purpose of monopoly and merger. This in itself is a psychological red flag to Canadians. The upshot of this was that the influential board of the CPR did not want unsavoury Conservative Max Aitken acquiring the only English-speaking newspaper in Montreal—at that time the one real city in Canada.
But then something very strange happened.
Soon after this event, that very same CPR board needed the merger insight of Max Aitken. Sir Edward Clouston, a man with a profile somewhat like the mustachioed villain in silent films, and president of the Bank of Montreal, enthusiastically put Max’s name forward.
So the board members approached Max Aitken, seeking out the same qualities they had rejected just a few months before. They had three cement companies, and they needed his ruthless efficiency to create a merger, which would generate sales, and to sell the stock to the public. As promoter of this merger deal, he would be rewarded with a percentage of the profits from the shares sold.
He was asked by Sir Sandford Fleming, a member of the board of the Canadian Pacific Railway, himself. (Fleming, who would have been eighty
at this time, had been the chief engineer in the building of our national railway, the “inventor” of Standard Time, and the main advocate for the telegraph cable between Canada and Australia. Now, late in life, he was to deal with another major challenge, Mr. Max Aitken. It is strange how fate sometimes plays out its hand.)
Yet, as Marchildon explains in his book Profits and Politics, there was a very serious devil in the details. Fleming was very close to bankruptcy, and was in a panic to save his reputation. This was something Max Aitken was not told. The price of cement was down, because of the economic crash of 1907, which Aitken had witnessed with alarm. Worse, Fleming’s partner in the Western Cement Company, a man named Irvin, had skimmed $500,000 as payment to himself from the company. Fleming had desperately borrowed funds from the Bank of Montreal against the value of the company, and petitioned the CPR for financial help. Now he owed them both hundreds of thousands. But he and Irvin realized that, with the low price of cement and lack of development, a merger of some sort was required to save him. If anyone could pull it off, Max could.
At first the planned merger went well. But Max to his death insisted that he discovered a ruse. One company they wanted to float, Exshaw of Alberta, was bankrupt, and Fleming’s partner, Irvin, was also willing to skim money from any unwitting partners, like, as Marchidon states, a pyramid or Ponzi scheme, in which the people in control sell out to those coming in and reap the benefits, leaving the buyers with the debt. This was something Irvin didn’t think Max would discover.
As for Exshaw’s bankruptcy, Irvin and Fleming hoped to hide this. To keep the bankruptcy from the other cement companies who were joining the merger would be criminal. By its very nature, the merger was dishonest, and Max knew he would be singled out as the force behind a dishonest merger. This is probably why Clouston chose him.
Lord Beaverbrook Page 4
