Nailed It: How a Montreal Hardware Manufacturer Thrived in the Great Depression of the 1870s
In early 1868, eighteen of the richest and most powerful men in the British Empire formed Montreal Rolling Mills, a company that quickly became one of the most important manufacturers in Canada. Heading into the 1870s the company had every reason to be optimistic, but in 1873 things fell apart. First, company director Hugh Allan’s corrupt financing of the ruling Conservatives’ election campaign in exchange for the charter for the transcontinental railway was exposed, leading to the victory of the free-trading Liberal Party. Shortly thereafter, the Vienna Stock Exchange crashed, ushering in what contemporaries referred to as the Great Depression. This kneecapped Montreal Rolling Mills’ strategy for growth, eliminating the possibility of a transcontinental railway to bring their nails to homesteaders in the newly-acquired northwest.
And yet the company thrived in the 1870s. It achieved this by careful attention to both its inputs and outputs. Besides slashing wages, little was done to improve efficiency on the factory floor. Rather, the directors concentrated on traveling to England to negotiate low prices on raw iron, while mobilizing their powerful political and social connections to lobby the government for protective tariffs. These were activities that suited the gentlemanly capitalists that made up the company’s board of directors. But perhaps more importantly, Montreal Rolling Mills benefited from having been created as a joint-stock corporation, a form of business organization that was not yet common in the British Empire. The immense concentration of wealth represented by its stockholders insulated the company from the pressures that took down so many of its competitors. Indeed, the Great Depression was a watershed, the period where Canada became a “corporation nation.”
