Company Of Adventures - Merchant Prince Part 21

352 MERCHANT PRINCES.

took breeding and intelligence for granted, and they genuinely represented the interests of the HBCs shareholders! 97 percent ol"whom were domiciled within the United Kingdom.

Arrayed against these British proprietors and their distinguished proconsuls was a tightly knit posse of Winnipeg's finest. Midwestern squires, they were good if limited men, frontier-tough and d.a.m.ned if they were going to kowtow to these haughty strangers wearing spats and with handkerchiefs up their sleeves. Yet they loved being involved with the Company that had once ruled the West and eventually viewed themselves as a kind of apostolic succession, smoothly following one another as members of the HBCs Canadian Committee. That tenure became such a desirable badge of office among the local business 61ite thatjoe Links, the British board's wittiest member, once quipped: "In England we gave them knighthoods; in Winnipeg they became directors of the f ludson's Bay Company."

In a very real way, Canadianization of the Hudson's Bay Company was part of the decolonization of the British Empire. Victory through gradualism.

In the fiftyeight years between formation of the first Canadian Advisory Committee in 1912 and permanent transfer of the Company's charter across the Atlantic in 1970between the governors.h.i.+ps of Lord Strathcona and Lord Amory-a sequence of tippy-toe measures was reluctantly taken to s.h.i.+ft authority from London to Winnipeg. Although provision of a domestic registry for Canadian shareholders had been suggested as early as 1908, it wasn't until forty-five years later, in 1953, that it was actually put into effect. On October 16, 1958, the Hudson's Bay Company board convened in Winnipeg, the first time its directors had met outside London in 288 years.

It took another half-decade before the British shares were listed on the Toronto Stock Exchange. A THE LORDS AND THE GOOD OLD BOYS 353.

11BC Board of Directors' meeting, Winnipeg, October 16, 1958

year later, for the first time the Companys dividend cheques were paid to Canadian shareholders in Canadian dollars instead of British pounds, and it was 1970 before the annual report was printed in Canada.

The transfer ol'substantive decision-making authority didn't really begin until 1930, when Winnipeg was granted power of attorney to deal with the Company's day-to-day operations. In 1957, the Canadi~n Committee's members became directors of the mother firm, though it took a further six years before they were allowed to outnumber their British colleagues. "The Canadians were always trying to grab more authority," remembered Peter Wood, for thirty-eight years the Company's senior financial officer, "but the Brits kept hanging on, putting little roadblocks in the way, standing about with long faces, stressing the risks and disadvantages, so that it was difficult to be enthusiastic. They 354 MERCHANT PRINCES.

were such a distinguished and respected group that it was hard to ignore them. Besides, they held the power."

The nature of that power was limited at best, authority and responsibility being divided between two continents, with London possessing the former but unable to impose the latter. It was one thing to draft policies in the hush of the 11BCs City boardroom but quite another to police how-or whether-those directives had been followed in the field. Accountability was always the pivotal issue, yet making orders stick was never satisfactorily resolved. The mesmerizing effect of the HBCs unique history made everyone cautious about allowing authority to be dispersed too quickly or too widely. The Canadian Committeemen had the local knowledge but not the breadth of experience to run a malor trading company; the London directors possessed the necessary expertise but were too far removed from the trenches to have much practical input.

The operating heads of the Company in Canada quickly realized that their main leverage lay in how much or how little data they transmitted across the Atlantic, and being astute about it-knowing full well that rationing performance statistics would only make London suspicious-they tried to overwhelm the 11BCs British headquarters with tidal waves of facts. Sheaves of weekly returns enumerated each post's fur intake and each department store's inventory of socks; every transaction was meticulously doc.u.mented and transmitted overseas. What went missing was any feeling about the exciting new economy sprouting up north of the 49th parallel.

That omission was less by design than by the character of the Canadian operation. The Committee, in fact, knew verv little about the new Canada evolving outside Winnipeg's munic.i.p.al boundaries. Its members stubbornly resisted lifting their sights beyond regional concerns, leaving others, as they haughtily declared, "to THE LORDS AND THE GOOD OLD BOYS 355.

go whoring in the East." The dynamics of delay ruled the Company's affairs.

THE 'I'ENSION TILU PERMEATED RELATIONS between the British directors and Canadian Committeemen even touched their social lives. Sir Eric Faulkner recalled his firstvisit to Winnipeg in the mid-1950s when lie was the HBC's Deputy Governor: "I was viewed with enormous suspicion by the Canadians and subsequently learned they were told to invite me to their houses for a drink, but under no circ.u.mstances to serve me a meal until they'd taken my measure. I went to have a drink with Stu Searle, who turned out to be a delightful man. After a whisky, he suddenlY exclaimed, 'Do you realize I'm not allowed to ask you to dinner? This is b.l.o.o.d.y nonsense, but since there's no food in the house, let's go out and eat.' We finally changed our minds and had scrambled eggs while sitting on his living-room floor, and that was the beginning of a friends.h.i.+p that lasted all our lives."

In a letter to thc last British Governor, Lord Amory, the last Chairman of the Winnipeg Committee, David Kilgour, betrayed the Canadians' real feeling about the visitations of London dignitaries. "I confess," he wrote, "we are probably unduly annoyed by individuals who have that austerc superiority which we Western Canadians ascribe to some Englishmen. . . ." Joe Harris, one of the Canadian Committeemen, was more blunt. "When a North American wants to insult you," he explained to Amory, "he calls you a son of a b.i.t.c.h, laughs with you about it over a drink at hinch, and forgets it by evening. A Britisher, on the other hand, does it in the most thoughtful courteous language that can be devised-and writes it into the Minutes."

The Canadians' standoffish att.i.tude was demonstrated in the smallest gestures. Most of the 356 MERCHANT PRINCES.

Wimipeggers owned lodges in the duck-hunting marshes northwest of Winnipeg, and even though the aristocratic visitors loved shooting, invitations were seldom forthcoming. "It was soon clear that ... the Winnipeg Establishment didn't want them at their lodges and sent them out to Delta for me to take care of," wrote A] Hochbaum, then in charge of the local waterfowl research station. "I remember especially what fine specimens of the human race were Tony Keswick [the HBCs Governor] and Sir Henry Benson [then Deputy Governor]. I kept wondering why Wnnipeg society didn't wish to have them for a weekend. They shot like gentlemen, drank like gentlemen, swore like gentlemen-and didn't mind the outdoor toilets."

The British visitors tended to be overpolite, slightly patronizing and more than a little puzzled by the Winnipeggers' provincialism. "I once asked Con Riley, the first time I met him after he was appointed to head the Canadian Committee," Keswick recalled, "exactly what Winnipegwas famous for. I've never forgotten his answer. He said very quietly, without looking left or right, 'Nice people,' and left it at that."

Both groups were so internallv cohesive it was difficult for either side to comprehend the other. Except for one attempted coup dVtat in 1963, the British directors were so compatible they didn't bother taking votes on any significant issue. "I was going to say we never voted on anything,"

recalled Joe Links, a twentv-eight year board member, "but we actually did hold one vote when we were getting some new china for serving tea in the boardroom. Some of us wanted green, some wanted yellow. I think the yellows had it."

The British directors received virtually no perks, and none of them needed either the prestige or the token stipend (S,~500 annually). Yet there never seemed to be a shortage of top-drawer candidates. "We frankly had the pick of the best men in the ('try," boasted Lord Amory. "I THE LORDS AND THE GOOD OLD BOYS 357.

don't remember any directors whom we thought of turning us down, no matter how high their calibre. AA -hereas the Canadian Committee people were big men on1v in Manitoba, but had little contact with the rest of Cana~a."

The executive committee of the British board met at noon every Tuesday (with the entire directorate attending once a month); sherry was served at quarter to one, though several of the more robust members would have preferred gin and tonic. Seated under the portraits of past Governors and surrounded by silver objects, some dating back to 1670, they discussed Company business, mainly reports of the Canadian Committee, which met each previous Thursday. Over lunch they would lapse into a wider discussion of public affairs, occasionally touching some such tangent as dismissing the latest biography of Lord Keynes for being the work of an Oxford man struggling to understand a Cambridge mind. The east wall of the walnut-panelled boardroom was covered with a map showing the Company's posts and operations, visited yearly by the Governor or his deputy. Most shareholders' annual meetings (still called "Courts") were quick and tame affairs'- an elapsed time of seventeen minutes in 1957 was the record for speed. "One frail old proprietor," recalled Links, "used to refer at the annual Court to the previous speaker, equally frail, as 'the adventurer who has just sat down,' probably correctly, since we were 'the Governor and Company of Adventurers of England, trading into Hudson's Bav.- Immediately after the Second World War, bankers became significant on the 11BC board, mainly in the person of Sir Eric Faulkner (later chairman of both Lloyds Bank and Glyn, Mills). He had won a football Blue at Cambridge, partic.i.p.ated in the retreat at Dunkirk, fought against Rommel, done all the important things expected of an all-round English gentleman of his generation, yet he regarded his dozen years with the HBC as very special.

358 MERCHANT PRINCES.

Sir Edward Peac.o.c.k

"During the 1930s when I first went to Glyn's," he recalled, "I thought that if I ever did succeed in getting up the ladder and was allowed to take outside directors.h.i.+ps I would love to be invited one day to join the board of the Hudson's Bay Company. By chance fate dealt the cards that way. I well remember saying laughingly at one of our board meetings, 'G.o.d, what a Company this is, never a moment of peace. There is always turbulence somewhere."' Sir Martin Jacomb, another distinguished bankerwho also served on the HB(' board, reached a similar conclusion. "Some inst.i.tutions," he said, "although they are only legal ent.i.ties, do have real organic personalities. The Bay transmits that feeling to anyone who comes in contact with it."

One of the HB(:s great strengths A as the active interest in its financial welfare displayed by the Bank of England. The Old Lady of Threadneedle Street had actually been founded twenty-four years after the THE LORDS AND THE GOOD OLD BOYS 359.

Hudson's Bay Company-a fact successive central bank governors were never allowed to forget-but the two inst.i.tutions remained very close. Half a dozen Bank of England governors and directors had been either gover nors or directors of the HBC, Including SirJohn Henry Pelly, Henry Hulse Berens, (' corge Joachim Goschen, Sir Robert Molesworth Kindersley, Sir Patrick Ashley Cooper, Lord Cobbold and, above all, Sir Edward Peac.o.c.k. The Canadian-born financier had for two decades been a dominant figure in the Bank of England and later became senior partner of Barings, the London money house the Duc de Richelieu, premier of France, had in 1818 dubbed Europe's "Sixth Great Power,"

alluding to the continent's economic order being ruled by England, France, Prussia, Austria, Russia and Baring Brothers. Peac.o.c.k, who became an 11B(' director in 1931 and stayed on the board for the next nineteen years, was also an adviser to the Royal Family and had been inti inately involved in matters financial and otherwise con cerning Edward V111's abdication. His influence on the 11BC , s economic deliberations over two crucial decades was considerable, and it was highly conservative.

Because of existing tax laws, the English shareholders much preferred capital gains to income, so that stock splits were more desirable than dividends. The Company's capital funds were grossly inadequate to keep it expanding along with the C anadian economy because until 1960 the HBC refused to borrow. "We all hated hotrowing and considered any loan a blister on the balance sheet," Keswick confirmed. "Mum told us you mustn't overspend your allowance, and that was the British discipline. We were against borrowing because we saw all around us people borrowing tremendously and getting into difficulties, and we didn't want our beloved Hudson's Bay Company to get into trouble. We may have missed some tricks, but we were old-timers and had seen accidents happen before."

360 MERCHANT PRINCES.

The real paradox was that despite their "blister on the balance sheet"

att.i.tude and the rigid corporate directives that flowed from that bias, the London directors were often less averse to risk than the Winnipeggers. "It always seemed to me that we were more anxious than the Canadians to modernize and keep tip with the times," Faulkner recalled.

"Few of the Winnipeg directors got around the country or the Company, and so were inclined to miss opportunities. We could never persuade them to travel much outside Winnipeg. They might have a look-in at the Vancouver store if they happened to be there, but we'd often add a week or two to our tours and go to the really remote places, into the Saguenay country or way up into the Arctic, where we were welcomed by the staff who were delighted to see a director, even an English one."

THE DICHOTOMY OF THE MENTALITIES at work in Winnipeg and London reached far deeper than that. The Canadian West is a land of long memories. At the turn of the century, Winnipeggers had felt at the very forefront of Canadian civilization. The Winnipeg Telegram proudly reported in its.f anuary 29, 19 10, edition that the city had nineteen millionaires, pointedly adding that Toronto, many times its size, had only twenty-one.

An American journalist who arrived the following year waxed enthusiastic about the Manitoba capital as the Chicago of the North, "a gateway through which all the commerce of the east and the west, and the north and the south, must flow. No city, in America at least, has such absolute and complete command over the wholesale trade of so vast an area. It is destined to become one of the greatest distributing commercial centres of the continent as well as a manufacturing community of great importance."

THE LORDS AND THE GOOD OLD BOYS 361.

Instead, completion of the Panama Ca.n.a.l gradually eliminated Winnipeg as the transportation and distribution linchpin of the Canadian economy's spread to the Pacific coast, although the population of Vancouver surpa.s.sed that of Winnipeg only in 193 1.* No longer a potential Chicago, Winnipeg became Canada's Viennaa city-state without an empire. Geared to supply a hinterland half a continent wide, it became an economic backwater, its geographical significance drastically reduced by history's tides. Most Winnipeggers responded to the change by leaving or sending their children to carve out lives and careers elsewhere; certainly the city's most valuable export was its people. Those who stayed either accustomed themselves to living in a pleasant, unspectacular place or-like the Hudson's Bay Committeenien-scarcely acknowledged Winnipeg's demise. Bound together by fear of their own irrelevance, the Bay men dug in. WL. Morton, the Manitoba historian who understood his province better than anyone else, concluded that the local business community-from which

*The Panama Ca.n.a.l was on1v one factor in Winnipeg's decline, though a major one. Also at fault was the post-war collapse of the local wholesale business, when prosperity allowed carload lots to be s.h.i.+pped across the West instead of being broken up by wholesalers in Winnipeg, which meant that the three provinces West of Manitoba began to deal directly with the large eastern companies and inst.i.tutions. As that trend intensified, Winnipeg tapered off to being a provincial capital, even though more cultured than most. At the same time, the financial functions of Winnipeg changed. First, British Columbia banking executives were allowed to report directly to head office in Montreal or Toronto. Later, because of the 1947 oil boom, the same became true of Alberta. The service industries, especially insurance, fol- lowed the pattern of the banks. Until the late 1940s W-innipeg was the regional centre of the entire West for these industries, but it declined rapidly after that.

362 MERCHANT PRINCES.

the Hudson's Bay Company's Committeemen had been drawn-was "cautious, canny, reactionary, untravelled, fearful of ideas and of imagination."

The most unyielding point of dispute between London and Winnipeg directors was location of the Canadian headquarters. In the mid-1930s the British Governor hinted thata move to 'Ibronto might be desirable, to take better advantage of the country's future opportunities. The Winnipeg Committee immediately threatened to resign en ma.s.se, and a lame compromise of naming a few token non-Manitoba directors was finally accepted. Still, the Winnipeggers howled in anger and frustration-even though the appointees ranked among Canada's best-connected businessmen.

J.W. McConnell, for example ', was a dominant figure in St Lawrence Sugar, Ogilvie Flour Mills, the Bank of Montreal, CPR, Canada Steams.h.i.+p Lines, Brazilian Traction, Dominion Bridge, Sun Life, Inco, Roval Trust and later the iWontreal Star, while another, b.C. Coleman, was senior vice-president of the CPR (as well as a director of Metropolitan Life and Canadian Marconi) and had only recently moved away from Winnipeg. The then resident HBC managing director a.s.sured London that these two Eastern members were "of no practical value to the Company" and that "in any case, it was impossible to justify paying them the same fees as the Winnipeg members who did all the work" so that "if the Board wished to keep them, their fees should be reduced to $50 a meeting." As late as 1966, the Canadian managing director, Richard Murray, wrote a four-page, closely s.p.a.ced memorandum to the then Governor, Lord Amory, explaining that the HBC's headquarters had to stay in Winnipeg "both now and in the future" because it was Canada's geographical centre, had adequate Telex and air services, and that even if executives had to be paid a premium for being willing to relocate there, it meant lower turnover because there THE LORDS AND THE GOOD OLD BOYS 363.

would be less "job hopping." What Murray failed to mention was that this was true mainly because there was nowhere to hop to -and that maintaining headquarters in Winnipeg almost guaranteed being out of touch with the mainstream of Canada's business community. "The actual benefits from such contacts," he buffed, "are intangible, vary with individuals, and are impossible to calculate ... [but] this affects a very small portion of the total number of executives and thus cannot be given too Much weight."

Not only did the HBCs Canadian pastorate limit itself to a Winnipeg parish but its members.h.i.+p was circ.u.mscribed by directors.h.i.+ps in a handful of local companies. A dozen 11BC Committeemen who held office between 1913 and 1970 were also directors of Great-West Life a.s.surance, for example, and David Kilgour, who was the head of both concerns, once a.s.sured the British Governor that "the Canadian Committee of the Fludson's, Bay has perhaps very parallel objectives so that it is wholly natural that there should be some duplication between the two Companies."

The other -Winnipegbased firms that sp.a.w.ned succeeding generations of HBC Committeemen included Monarch Life, Beaver Lumber, Northern Trusts, Canadian Indemnity, Manitoba Bridge & Iron Works, Osler, Hammond & Nanton and, most important of all, the Richardson group. The successive generations of Winnipeg Establishment men who ran these commercial concerns were entwined corporately, socially and even genetically The Hudson's Bay Company in Canada was run by a clique of buddies with limited horizons and a common mentalitv. Part of that mindset was their determination to breali the hold on the West of St James Street in Montreal and Bay Street in Toronto by establis.h.i.+ng strong corporate princ.i.p.alities in Winnipeg. Local control of the f1BC was an essential element in that strategy.

364 MERCHANT PRINCES.

l3F'FWF,EN 1911 AND 1926, the Hudson's Bay Company built or purchased its fleet of flags.h.i.+p downtown department stores in Victoria, Vancouver, Edmonton, Calgary, Saskatoon and Winnipeg, opening smaller versions in Kamloops, Vernon, Nelson, Macleod, Lethbridge, Yorkton and Kenora, all of them initlallv successful as the transcontinental railA ays deposited tens of thousands of new customers on their doorsteps.* Despite the prolifer- ation of department stores across the country, their share of the retail dollar remained constant-at 10.23 percent in 1923 and exactly the same percentage three decades later, which meant fierce compet.i.tion among the existing players and minimal profit margins. Figures released by Harrv Stevens's 1934 Royal Commission on Price Spreads showed that only the HBC'S coal sales were keeping the retail operation in the black, and PeterWood estimated that the stores had actually never made a profit.t By the time Lord Strathcona had completed his interminable governors.h.i.+p in 1914, the I IBC was accurately

*The IIBC was actuallv a latecomer among Canadian departmerit stores. As well as the inajor Eaton's and Simpsons chains originating in Toronto, there werejas. A. Ogilvy's, Morgan's and Dupuis Fr~res in Montreal; Bowring's in ~t John's; Wood Brothers in Halifax; Manchester, Robertson, ildlison in Saint John; Paquets and Pollack's in Quebec City; Charles Ogilvy's in Ottawa; Robinson's in Hamilton; Smith,.,, in Windsor; Goudie's in Kitchener; Smallman and Ingrains in London; Williams's in Regina; Spencer's in Victoria; and "oodward's in Vancouver.

tIIBC earnings between 1947 and 1983, for example, totalled $897.5 million, while income from all non-merchandise sources (including land sales, fur auctions and oil royalties) amounted to $954.2 million. That meant a loss of$56.7 million attributable to the department stores in thirty-seven years, (The calculation a.s.sumed the stores had to finance their own debt loads and did not take into account the fact that operating the outlets increased their real-estate values.) THE LORDS AND THE GOOD OLD BOYS 365.

described as being "more of an historical curiosity than a vital enterprise, because it had failed dismally to keep pace with the Dominion." Although London retained its power under Stnithcona's immediate successors (Sir Thomas Skinner and Sir Robert Kindersley), the Canadian Advisory Committee named in 1912 had no authority beyond helping London keep in touch with local conditions. It included Sir William Whyte, the Winnipeg-based retired vice-president of the CPR's western division, and George Galt (a nephew of Sir Alexander Tilloch Galt, one of the Fathers of Confederation), who had established Blue Ribbon Limited, a Winnipeg wholesale grocery house, and become a director of three of the city's touchstone companies: Great-West Life, Northern Trusts and Manitoba Bridge & Iron Works. The Galt family lived at 460 Wellington Crescent, described as "the finest house from Fort William to the coast," and George Galt remained on the Canadian Committee until 1928. Augustus Nanton, the third of the original Committee inenibers, was a central fig-Lire in Winnipeg financial circles who served on the boards of Great-West Life and Manitoba Bridge & Iron Works and turned the investmerit firm of Osler, Hammond & Nanton into a major player in prairie land and resource ventures.*

*The extent of Nanton's partic.i.p.ation showed up in the fact that twelve western towns and cities have streets named after him, and there is still a Nanton, Alberta, between Calgary and Fort Macleod. An early nationalist, Nanton protested when an American firm was hired to make a film commemorating the HBC's 250th anniversary in 1920 ,and prohibited the abbreviation U.S.A. from appearing anywhere in the presentation. Xlv'hen Nanton became a key animator in the citizens' corrin-littee organized in 1919 to quash the General Strike, his farm was a target for demonstrators, who burned down the stable.

366 MERCHANT PRINCES.

Nanton could not exercise much Canadian influence on the HBC because the land and fur-trade commissioners reported directly to London. Even worse, the key depa rtment- store operation was run by Herbert E. Burbidge, "hose father headed Harrods and was a London-based director of the Bay. Only thirty years old wheri he was handed responsibility for the Canadian retail outlets, clearly modelled on the Harrods Brompton Road department store, the young Burbidge moved the headquarters of the retailing division to Vancouver, where he was comfortably settled, and allowed the individual units to fend for themselves. This meant giving up the advantage of ma.s.s buying, with the manager of every department in each store free to set his own mark-ups and credit policies. The chain soon became unnianageable-even if in 1914 its profit (Y,63,757) for the first time surpa.s.sed that of the fur department (Y.55,008). By 1919, Burbidge, who turned out to be allergic to hard work, was fired and latcr supplanted by Edward Fitzgerald, a former CPR a.s.sistant purchasing agent, who was appointed the Canadian Committee's full-time Deputy Chairman. lie had little merchandising experience, found himself the p.a.w.n of games played between Winnipeg and London, and within six years returned to the relative calm of railroading. His main legacy was that (luring his stewards.h.i.+p the Canadian Advisory Committee (from now on simply called the Canadian Committee) was granted slightly more authority, including the naming of some senior appointees, but the Company had meanwhile acquired a much more profitable sideline.

SIR ROBERT NIOLESWORTH KINDERSLEY, who served as Governor from 1915 to 1925, was also chairman of the London affiliate of Lazard Fr&res, the Anglo-French THE LORDS AND THE GOOD OLD BOYS 367.

merchant bank, and it was through his Paris connections that the I IBC gained a unique opportunity. Using Jean Monnet, wartime organizer of the French government's emergency International Supply Committee (and later father of the Treary of Rome that sp.a.w.ned Europe's Common Market), as a go-between, he negotiated appointment of the Hudson's Bay Company as the French government's transportation agency for the duration of the First World War.* The contract would eventually net the Company Y,1,265,000 for five years' involvement, the most profitable single transaction in its long history, but it took a lot of doing. Thrown into disarray by the initial German advances, the French governinent had moved to Bordeaux and was desperately seeking a way of supplying its population with foodstuffs and its troops with ammunition. There being no effective French merchant marine available, Alexandre Millerand, France's war minister, named the HBC the country's chief purchasing agent to arrange international credits and charter the s.h.i.+ps required to deliver the goods.

The Company's I-percent commission on these transactions was well earned.

The Bay Steams.h.i.+p Company, a hastily, set-up subsidiary, chartered 286 merchant s.h.i.+ps totalling 1.58 million tons deadweight, which carried 13 million tons of supplies to French ports. In addition to grains from Canada, Argentina, Algeria and Australia and sugar from Cuba, Java and Martinique, their cargoes included coal from England and the United States, groundmits and palm-kernels from Morocco, and airplane parts from Casablanca.

By war's end, the Company was operating the world's third-largest merchant fleet, loading 11,000 tons -of

*As a reward, Monnet later was granted a 11~640,000 "loan," most of which was written off. Its existence was not mentioned in Monnet's memoirs or in the HBC.% annual reports.

368 MERCHANT PRINCES.

goods daily-the equivalent of the Nonsuch's cargo every seven minutes.*

It had been contracted to carry out similar supply missions for Romania and the White Russian Army (following the Bolshevik Revolution), through an agency at Archangel. The Company's house flag-the Red Ensign with the letters HB.C. on the fly-became a recognized and proud symbol in ports the world over, the more so since German submarines, storms, icebergs and fires at sea sank I 10 of the Bay s.h.i.+ps. The maritime commerce was highly profitable but horrendously complicated. Towards the end of 1917, for example, the HBC undertook management of four large Russian liners capable of carrying 13,000 pa.s.sengers that became international ferries, taking Central Europeans, Belgians, Romanians and Argentines out of Russia before collapse of the Tsarist regime. The German steamer Prinz Heinrich, interned in Portugal where she had been requisitioned by the government, was chartered by the British government, then sublet to the French government, which turned her over to be operated by the 10c. The Company used her to repatriate Russian Jews who preferred returning home to service in the British Army. (Each pa.s.senger had to be provided with kosher rations for the long railway trip from Murmansk to Petrograd.) Co-ordinating such complex arrangements and handling a.s.signments for the Company's 145 purchasing

*One problem was that the Company soon ran out of t.i.tles for its expanded fleet and began using such forms as Bayford, Baykerran, Bayfield, Baymount, Bdysoto, Baychattan and so on. The names, one of the I-IBCs senior officials explained to jean Monnet, should be limited to "10 letters, that is including the first three [Bay], the reason being that they can then be telegraphed as one Word, and this, over the course of a year, makes quite a little economy compared with the names which cost two or three words."

THE LORDS AND THE GOOD OLD BOYS 369.

The HBCs Baytigern at Brest during the First World War

agents went far beyond the HBC's existing knowledge or established facilities. The London staff was expanded from 10 to 120, and to head the operation Kindersley hired, as the HBCs full-time Deputy Governor, Charles Vincent Sale, president of his family's firm of coal s.h.i.+ppers, EG. Sale & Sons, whose unoriginal motto was "Coals to Newcastle." Sale and Kindersley had swung many deals together, providing rails to the j.a.panese for construction of the Manchurian Railway as well as trading arms, cotton, coal and metals between the United States, Belgium and the Orient.

Both men were close to Lord Cowdray, Minister for Air in Lloyd George's wartime cabinet, and had made friends with Sir John Anderson, who as Lord Waverley would subsequently become an HBC director. A tall, pink-faced workaholic, complete with white military moustache, bowler hat and wing collar, Sale was pompous and could be fussy. Dora Darby, who was his secretary, recalled that he sometimes came into the HBC offices on Sat.u.r.days and "checked the girls' work stations searching for cosmetics.

lie put any he found on their desks to indicate they did not belong in an office. He was very strait-laced, and when he was 370 MERCHANT PRINCES.