II-156536 | Max Aitken, later Lord Beaverbrook, Montreal, QC, 1905
Max Aitken, later Lord Beaverbrook, Montreal, QC, 1905
Wm. Notman & Son
1905, 20th century
Silver salts on glass - Gelatin dry plate process
17 x 12 cm
Purchase from Associated Screen News Ltd.
© McCord Museum
Keywords: male (26812) , Photograph (77678) , portrait (53878)
Keys to History
In Canada's early-twentieth-century industrial boom, bigger meant better. Mass production, an expanding national market and cost-saving technologies combined to make the merging of small companies into larger corporations, or "combines" as they were called, attractive. There were two types of mergers. Vertical mergers allowed a company to capture all phases of production from primary production (e.g. mining raw ore) to final product (e.g. manufacturing finished goods like nails). Horizontal mergers allowed a company to take over competing companies in the same sector of the economy (e.g. a retailer takes over its competitors selling the same or similar goods).
"Merger mania" peaked in 1909-1913, when 97 mergers totaling $200.7 million in assets were completed. Companies like the Steel Company of Canada (Stelco), Canada Cement, Canadian Locomotive and Canada Steamship were born by merger in this brief period. Fast-acting financiers like Montreal-based Max Aitken orchestrated these mergers, often skimming huge commissions off the transaction by selling "watered" shares in the new enterprise (i.e. shares that inflated the actual value of the assets). The federal government in 1910 introduced legislation to investigate the impact of combines on competition.
Merger mania gave Canada large companies that were identifiably national. Adjectives like "Canadian" or "Dominion" were usually added to the new name to suggest the scope of the new enterprise. These companies also created a class of "industrials" for investors - shares and bonds in industrial enterprises. Hitherto, Canadian investing had been restricted to railways and government bonds.
The merger movement reinforced the place of Ontario and Quebec as Canada's industrial heartland. The financial promotion of these enterprises was also rooted in Montreal and Toronto. The power of St. James and Bay Streets would in later decades fuel resentment in the West and Atlantic Canada.
Canada was not alone in embracing industrial combines. Huge industrial conglomerates emerged in the United States - General Motors, for instance - and Europe in the early-twentieth century. "Trust busting" became a goal of U. S. President Theodore Roosevelt's administration (1901-1909).
Max Aitken (1879-1964) was a poor boy from Maple, Ontario who, with little formal education, began a business career as door-to-door bond salesman in the Maritimes and graduated to the inner circle of Montreal high finance by 1902. He orchestrated the Stelco and Canada Cement mergers, making a lavish profit and attracting criticism for his devious methods. In 1910 he left Canada for England, where he entered politics, became a cabinet minister in World War I and eventually built a lucrative chain of mass-circulation British newspapers. Knighted in 1911, he became Lord Beaverbrook in 1917.