Editing Pacific Scandal (section)

== Background ==
For a young and loosely defined nation, the building of a national railway was an active attempt at state-making,{{sfn|Berton|1970|page=7}} as well as an aggressive capitalist venture. Canada, a nascent country with a population of 3.5 million in 1871,{{sfn|Berton|1970|p=6}} lacked the means to exercise meaningful ''[[de facto]]'' control within the ''[[de jure]]'' political boundaries of the recently acquired [[Rupert's Land]], and building a transcontinental railway was a national policy of high order to change that situation.{{sfn|Creighton|1955|page=120}} Moreover, after the [[American Civil War]], land-hungry settlers rapidly pushed the American frontier westward, exacerbating talk of [[annexation]]. Sentiments of [[Manifest Destiny]] were abuzz at the time: in 1867, the year of Canada's [[Confederation]], [[US Secretary of State]] [[William H. Seward]] surmised that the whole North American continent "shall be, sooner or later, within the magic circle of the American Union."{{sfn|Berton|1970|p=10}} Consequently, preventing American investment in the project was considered to be in Canada's national interest. Thus the federal government favoured an "all Canadian route" through the rugged [[Canadian Shield]] of northern [[Ontario]] and refused to consider a less-costly route passing south through [[Wisconsin]] and [[Minnesota]].

However, a route across the Canadian Shield was highly unpopular with potential investors in not only the United States but also Canada and especially Great Britain, the only other viable sources of financing. For would-be investors, the objections were primarily based not on politics or nationalism but on economics. At the time, national governments lacked the finances needed to undertake such large projects. For the [[first transcontinental railroad]], the [[United States government]] had made extensive grants of public land to the railway's builders, inducing private financiers to fund the railway on the understanding that they would acquire rich farmland along the route, which could then be sold for a large profit. However, the eastern terminus of the proposed Canadian Pacific route, unlike that of the first transcontinental, was not in rich [[Nebraska]]n farmland but deep within the Canadian Shield.  Copying the American financing model while insisting on an all-Canadian route would require the railway's backers to build hundreds of miles of track across rugged shield terrain, with little economic value, at considerable expense before they could access lucrative farmland in [[Manitoba]] and the newly created [[Northwest Territories]], which at that time included [[Alberta]] and [[Saskatchewan]]. Many financiers, who had expected to make a relatively quick profit, were not willing to make such a long-term commitment.

Nevertheless, the Montreal capitalist [[Hugh Allan]], with his [[syndicate]] Canada Pacific Railway Company, sought the potentially lucrative charter for the project. The problem lay in that Allan and Macdonald were secretly in cahoots with American financiers such as George W. McMullen and [[Jay Cooke]], who were deeply interested in the rival American undertaking, the [[Northern Pacific Railroad]].{{sfn|Creighton|1955|p=120}}