The Beauharnois Scandal
Beauharnois’s importance to Narcisse Cantin and his competitors was based on its location relative to the St. Lawrence River’s flow pattern.Beauharnois’ Geographic Importance
Beauharnois is located 40 km southwest of Montreal, on the south side of Lake St. Louis, which is not a lake but rather a widening of the St. Lawrence River with Dorval to the east, Ile Perrot to the west, Beaconsfield to the north and Beauharnois to the south.
Between Lake Ontario and eastwards to Prescott, the St. Lawrence River has a fairly gentle gradient. Running east between Prescott and Cornwall, the River drops 28m (91 feet) – this is known as the International Rapids Section, with Ontario to the north and New York State to the south. A quiet section of the River, called Lake St. Francis, occurs between Cornwall and Valleyfield, where the River then drops 26m (84 feet) through the Soulanges section into Lake St. Louis. The River then drops another 14m (47 feet) through the Lachine and Cedar Rapids to Montreal Harbour.
The Beauharnois site, by virtue of geography, controls the dam locations and canal diversion essential to building a power plant.
Rights River Diversion & Power Development
As a result of grants made by the King of France, William IV of England and acts of the Quebec Legislature, William Henry Robert and the rest of the Robert Family heirs considered they had the right to divert water from the St. Lawrence River and to expropriate land for a canal route to carry the diverted water and to develop hydro electric power.
Water & Land Rights
In 1729, the King of France granted the Marquis of Beauharnois land and water rights in the Beauharnois area. In 1833, William IV of England granted land and water rights in the Beauharnois area to Edward Ellice, and by inheritance these rights eventually were held by the Robert Family.
The Robert Family had lived in the Beauharnois area since the 1850s. In 1888, Joseph Bartholomew Robert acquired an old feeder canal between Lake St. Francis and the St. Louis River at Beauharnois. J.B. Robert (died in 1908) and his son, William Henry Robert (W.H. Robert), established the Beauharnois Light, Heat & Power Company in 1902; all of the company’s shares held by Robert Family members. The right to divert the St. Lawrence River and to develop power transferred to the Beauharnois Light, Heat & Power Company.
Context to Law Suit & Scandal
In 1921, Narcisse Cantin’s company, The Great Lakes and Atlantic Canal and Power Company, began negotiations to buy the Beauharnois Light, Heat & Power Company’s assets, including the rights to divert water, build canals and develop hydro-electric power. On November 4, 1921, a deed of sale was signed by the Robert heirs for $500,000 (payment to be made October 1, 1922) with an option payment of $10,000 to be made November 1921. However, on November 30, 1921, W.H. Robert wrote the Great Lakes and Atlantic Canal and Power Company a letter withdrawing and disclaiming the agreement. Robert said:
“At the time this document was signed, the condition of my eyesight was such that I was unable to read it and when it was read to me I did not fully understand or appreciate that it might be possible for your Company to interpret it in a sense that might compel the Heirs to give your Company a Deed to our rights on the mere promise of the payment of $500,000 on the 1st of October next. Such was never the intention of the Heirs as is clearly shown by the terms of the option I promised to you under date of the 4th of October 1921.
Consequently acting for myself and as attorney of the other Heirs of the late J.B. Robert I hereby withdraw any and every promise, offer, or obligation contained and set forth in the aforesaid document signed by the said Heirs and dated the 4th of November, 1921, which was witnessed by A. Bergevin whereby the heirs agreed or offered to sell, assign and transfer to your Company the aforesaid rights.”
Cantin’s Company sued the Robert Heirs.
Between 1921 and 1926, during the legal negotiations and law suit, the Great Lakes and Atlantic Canal and Power Company continued as if they did own the Beauharnois Light, Heat and Power and all that company’s rights. In 1922, a new company was incorporated, the Transportation & Power Corporation Limited, and took over the property, rights and privileges of the Great Lakes and Atlantic Canal and Power Company and by extension those of the Beauharnois Light, Heat & Power Company. Cantin was the chief promoter for the new Company, his son Jean served as Director and Secretary and the Company’s president was Judge Adolphe Bazin.
On behalf of the Transportation & Power Corporation, Adophe Bazin wrote to the Honourable George P. Graham, Minister of Railways and Canals on June 24, 1924, outlining the Company’s canal and hydro-electric development intentions:
"the work the Company contemplates to undertake is the development of water-power by building a canal from Hungry Bay, Lake St. Francis, to Lapraire Basin, below Lake St. Louis, St. Lawrence River, using the water at Lapraire Basin under a head of 120 feet, the utmost efficiency head practically possible; it is essential that the Company should divert 110,000 cubic feet per second; the diversion of water is not to interfere with navigation; the Company agrees to provide navigation accommodation; as will satisfy the Government’s requirements."
In order to raise money for the project, the Company was in various negotiations for sale of the Company and its rights with a number of different agencies and interests, such as the Foundation Company of America, the Ford Company, J.P. White Engineering Company, Edison and the Royal Securities Corporation Limited of Montreal offered to purchase the Transportation & Power Corporation for $7.5 million.
From correspondence between the Transportation & Power Corporation’s representatives and potential investors, the Company and Cantin had two key obstacles to overcome:
- the ability to show clear title to the Beauharnois water rights and
- gain a contract to sell hydro-electric power.
In March 1925, Cantin took engineering data and other documents to a Montreal investment firm, Newman and Sweezey, where he was introduced to Robert O. Sweezey by Achille Bergevin (Quebec Legislature member for Beauharnois).
Cantin's Company Hires Sweezey
On April 5, 1925, at a meeting of the Transportation & Power Corporation’s shareholders at Montreal’s Windsor Hotel, Sweezey agreed to act as the Company’s chief engineer. Later that same year, Sweezey offered to negotiate a deal with the Robert Heirs and stated he was "the best man to carry on negotiations for the sale of power to Ontario Hydro." Cantin had begun negotiations with Ontario Hydro, but passed this job over to Sweezey. Sweezey also travelled to New York to deal with an investment group Cleveland Dunn (a silverware manufacturer) had interested in the power project and both Dunn and Sweezey believed they had a serious deal developing.
Sweezey Cuts A Side Deal
During the time Sweezey appeared to represent Cantin’s company, he was also working on another deal that would place himself in a controlling position of a syndicate seeking the same rights and hydro-electric power contracts as Cantin’s company. In a letter to Alderic Raymond, which would be cited as evidence during the Beauharnois Scandal investigations, Sweezey outlines his plans. In his letter, Sweezey’s reference to the St. Lawrence Waterways and Power Company is actually a reference to Cantin’s Company.
Dear Mr. Raymond,
Further to our conversation regarding the St. Lawrence Power project, in which we are both interested, I may say that though I have been familiar with this
situation for some twelve years, it is only during the past twelve months that I have devoted some serious attention to the study of the economic
possibilities of this million horse power development, near the city of Montreal, and on deep water navigation in the St. Lawrence.
Briefly stated, the power site is comprised in the natural fall of eighty-three feet, in the distance some fourteen miles, between Lake St. Francis and Lake St. Louis. It is proposed to divert by a canal through a clay section of level country on the south shore a minimum of 75,000 cubic feet per second of St. Lawrence water, or a possible maximum of 150,000 c.f.s. The effective working head would be seventy-five feet. In case of maximum diversion of 70% load factor, a development of 1,350,000 h.p. is possible, and at a cost which competent authorities place at not over $100 per h.p.
To place ourselves in possession of all the rights essential to this undertaking, we should pursue the following course:
- Acquire the Robert Rights which are fundamental in regard to an initial grant which he holds to divert 40,000 c.f.s.. He also holds rights granted by charter to expropriate for the proposed canal route. Numerous other incidental rights are included in his holdings which he is anxious to sell, though he wished to participate partially in the organization syndicated.
- Acquire the control of the St. Lawrence Waterways & Power Company stock, which is available to us, and upon which we have already a substantial hold.
- Enlist with our Syndicate two or three individuals, who in addition to providing some cash as their fair share, can assist us in getting our rights extended or enlarged so as to develop the entire available flow of the St. Lawrence at this point. As the whole situation is entirely within the Province of Quebec, our influence has to be exerted only in Canadian political circles – that is, at Ottawa and at Quebec.
- It will probably be advisable to enlist the participation of certain United States interests, who for their capital and initiative can be relied upon to absorb some of the power in Quebec Province in connection with some power using industry – similar to the Aluminum Company of Canada.
- The cash to be raised for the early stages of this project for the sole purpose of acquiring and enlarging rights to the extent of 150,000 h.p. diversion will approximate some six or seven hundred thousand dollars. It may take three or four years then before actual development starts.
In connection with personnel of Syndicate, I have in mind the individuals we should enlist with us, and although I have been in touch with United States people showing a desire to join, I have hesitated to accept any one definitely until certain that each and every one is persona grata to all others.
I have said nothing about the vision necessary to an appreciation of such a project from an economic standpoint, nor have I touched upon the huge profits that may be expected, as these are matters that the ordinary businessman can well picture for himself. I do not wish to minimize, however, the task that presents itself in rounding up and launching such a scheme. The actual raising of the money becomes easy, however, once the physical properties and rights have been gather in.
Yours sincerely,
R.O. Sweezey
Cantin's Company Loses Law Suit
At this time, Cantin asked Sweezey to negotiate a settlement with the Robert Heirs relative to the ongoing legal action between Cantin’s Company and the Beauharnois Light, Heat & Power Company. The Company’s suit against Robert was dismissed by Justice Duclos of Quebec’s Superior Court, but Judge Bazin had "not been able to agree with the judgment and had advised appeal". The Appeal was withdrawn when Sweezey negotiated a new arrangement with the Robert Heirs. Ultimately, the suit was settled and the Quebec Superior Court ruled in favour of the Beauharnois Light, Heat and Power.
In April 1926, Sweezey wrote to the Transportation & Power Corporation’s Board, requesting formal authorization to act upon their behalf in negotiating with the Robert Heirs: "Before opening any negotiations of even an informal character, we would like to have some form of authorization from your Company, enabling us to speak on their behalf. Would you, therefore, be kind enough to address a letter to us, authorizing us to discuss the question of possible users of power, and inviting us to make proposals towards the ultimate development of your Power Site, and give us some assurance that our efforts may not be set aside within a period, of say, one year."
The Board’s responded: "It is proposed that the letter from Mr. R.O. Sweezey be filed and that the President be empowered to authorize Mr. R.O. Sweezey to make proposals towards possible users of the Power and the ultimate development of the Corporation’s Power Site. The question of time to be left in abeyance until the basis of some definite agreement has been arrived at."
In June 1926, a financial arrangement between the two companies was reached and in September Cantin reported, "Mr. W.H. Robert expressed his eagerness that this agreement be carried out and once again asked me if it was entirely satisfactory to myself and the company for him to deal with Sweezey as our representative. I replied that Mr. Sweezey was acting for us."
In reality, Sweezey negotiated to buy the Beauharnois Light, Heat and Power Company for himself and not for Cantin’s Transportation and Power Corporation.
The Transportation & Power Corporation sued Sweezey for violation of a contract of mandate. Cantin’s Company was unable to prove that Sweezey was acting on their behalf and not for himself in his dealings with Robert. The court ruled against the Transportation & Power Corporation.
Cantin, convinced of Sweezey’s legal and moral dishonesty, personally sued Sweezey in Ontario’s Supreme Court. In a Writ issued April 10, 1928, Cantin claimed damages of $2 million. Cantin stated, had it not been for Sweezey’s action, the Transportation & Power Corporation would have been successful in securing canal and hydro-electric power development rights through legal or financial means with the Robert Heirs and the Beauharnois Light, Heat and Power Company.
Without canal or power development rights, Cantin’s plans collapsed. The Transportation & Power Corporation continued to exist for a few years and during the 1930s Cantin continued to advocate for a canal system, but the real possibility of his promoting it and the Company achieving anything ended.
With control of the Beauharnois Light, Heat & Power Corporation and its rights to divert water for power development, Sweezey incorporated a new company called the Beauharnois Power Corporation Limited. In addition to these original rights, in March 1929 Sweezey obtained the rights to divert 40,000 cubic feet of water per second from the St. Lawrence into a power canal. The new company then had to buy from the old Beauharnois company (owned by Sweezey) all of the original water and land rights. The water diversionary rights, the incorporation of the new company and the seeking of additional rights on the St. Lawrence River involved Canadian Senators and politically influential people. It was calculated that Sweezey stood to make $100 million.
Scandal Revealed
In May 1930, the Canadian Parliament turned its attention to what became known as the Beauharnois Scandal. Robert Garland, Member for Acadia District (Alberta), urged the government to cancel the incorporation of the Beauharnois Corporation and to rescind the order in council granting the diversion rights. Gardiner accused Sweezey of "disgraceful conduct" of "deceit and duplicity amounting to fraud" and asked the government for a judicial investigation.
It was revealed that Senators W.L.McDougald, Andrew Haydon and Donat Raymond were involved and that Prime Minister Mackenzie King had been marginally involved (see also Toronto Star Promoters’ Profits In Power Project Top $6,000,000 PDF). Ultimately, a Parliamentary Committee conducted a lengthy hearing and the Beauharnois project planned by Sweezey and his associates collapsed.
The Province of Quebec ultimately developed the Beauharnois power site. The fundamental principle established from the scandal was that development and management of a national resource, such as the St. Lawrence River, should be for good of the whole country rather than private or individual interests.
