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CLERGUE, FRANCIS HECTOR, industrialist; b. 28 May 1856 in Bangor, Maine, eldest son of Joseph Hector Clergue, a barber, and Frances Clarissa Lombard; d. unmarried 19 Jan. 1939 in Montreal and was buried in Mount Hope Cemetery, Bangor.
Francis H. Clergue’s father, who was of French Huguenot origin, emigrated to the United States in the late 1840s. His mother’s ancestors had arrived in the American colonies from Kent, England, in the 17th century. Her father was a well-known master shipbuilder. Francis, the second of eight children, was born during a period when Maine reaped the full benefit of an economy based on wood, wind, and water. He was educated locally, finding time while in high school to deliver telegrams for the railway stationmaster. Clergue may have taught school for a year before becoming a student-at-law in the office of Frederick M. Laughton and being called to the bar in 1878. He may also have attended Maine State College of Agriculture and the Mechanic Arts in Orono, where he is said to have taken courses in engineering.
Like ambitious young men in neighbouring New Brunswick such as William Maxwell Aitken*, Richard Bedford Bennett*, and James Hamet Dunn* in later years, Clergue recognized that, in a marginal region, advancement lay in attaching one’s ambitions to the metropolitan forces that governed its fortunes. While still a law student, he had attempted to gain employment in the Washington office of Senator Hannibal Hamlin. When he failed to do so, he joined his mentor to form the partnership of Laughton and Clergue and became Bangor’s solicitor. The two men were soon active in various business promotions, such as a silver mine in neighbouring Hampden.
Among other schemes that Clergue boosted, with varying degrees of success, in the following decade were electric lighting for the streets of Bangor, a street railway in the town, a company to ship ice to New York City, an electrical power station on the Penobscot River, and railway lines to connect urban Maine with its hinterland. He also backed an iron mine in Digby, N.S., a foghorn-manufacturing company, and a pulp mill. To finance his enterprises, Clergue created the Eastern Trust and Banking Company. An ambitious project to develop the tourist potential of Mount Desert Island in Penobscot Bay involved a cog railway up the slopes of Green (Cadillac) Mountain and a grand hotel, both of which opened for business in 1883 amid much fanfare, only to decline into bankruptcy within ten years.
In 1888, at the suggestion of prominent Maine politician James Gillespie Blaine, Clergue vied with Russian and British promoters for a long-term monopoly on railways, waterworks, and banking services in Persia (Iran). But his endeavours came to naught, and he returned home via St Petersburg, Russia, and Sofia, Bulgaria, where he had facilitated the flotation of a railway bond. His efforts to marry English capital to a shipyard and dry docks planned for Mobile, Ala., were equally unsuccessful.
Several persistent traits emerged in this early phase of Clergue’s career. He was a gifted and compelling wordsmith, able to summon up shining visions of future prosperity through the application of capital and technology. Such were his talents that potential investors believed implicitly in his projects; nothing seemed impossible. Unfortunately, his ideas frequently outstripped both reality and his own abilities. By training a lawyer rather than an engineer, he possessed a knack for recognizing the potential of a new technology but lacked the skills to map its practical use. His sympathetic biographer Edward Alan Sullivan* would later write that Clergue had “the courage of ignorance,” which “nerved him to attempt that at which a purely technical man would have hesitated, while his persuasive qualities drew others to follow his ventures.”
The promoter also understood the logic of industrial integration: the economies of scale to be reaped by clustering related enterprises around a common foundation and servicing them with shared energy and labour. In later speeches he would refer to this concept as “the principle of correlation.” “From the days of the first baboon,” he would remark in 1901 in his inimitably colourful fashion, “to the time of Carnegie, there has never been an industrial failure where the raw material existed to the best advantage, combined with the force necessary for its transformation into practical use.”
Clergue’s visionary powers were complemented by his ability to align himself with politicians and financiers who could supply the needed influence, capital, and encouragement. In the early 1890s he became an advance man for affluent Philadelphia and New York capitalists eager to discover new applications for the money they had accumulated in coal and steel. Canada, with its wealth of natural resources and growing industrial base, beckoned, and he was soon scouting out its possibilities. In 1894 he found himself in Sault Ste Marie, Ont., which had largely stagnated since the decline of the fur trade earlier in the century. The main line of the Canadian Pacific Railway had bypassed the community, and it had received little benefit from Canada’s westward push, though a short boom had followed the building of a spur line and an international railway bridge in 1887. Eager to emulate their counterparts on the American side of the St Marys River, which tumbled between Lakes Superior and Huron, businessmen in the Sault chartered their own company to harness the power of the rapids. But the undertaking exhausted its capital in building the plant and surrendered control to the town. After the head-race channel collapsed, the Sault was left with no power and a debt of $263,000.
When Clergue arrived there in 1894, he immediately spotted the potential for industrial correlation through the use of American capital. He bought the defunct power company and promised to expand its capacity and pump $200,000 into the local economy within a year. The grateful town council rewarded him with a 20-year exclusive franchise on the water power and a 10-year exemption from municipal taxes.
If Clergue was quick to read the ambitions of local politicians, he was equally perceptive about provincial and federal economic aspirations. The “made in Canada” ethos of Sir John A. Macdonald*’s National Policy still prevailed in Ottawa, and federal finance ministers sought to stimulate industrial production by the judicious manipulation of the tariff on imported goods and the generous application of bounties. In Ontario this goal was echoed in a desire to promote what was widely called the “manufacturing condition” within provincial borders, using public largesse in the form of tax exemptions, bounties, and duties. At the same time, politicians and businessmen endeavoured to realize their vision of “New Ontario,” the mineral- and forest-rich northern reaches of the province, as a resource base for markets in southern Ontario and the United States. Queen’s Park was ready to encourage such growth through land grants, resource rights, and cash incentives to promoters willing to open up the region. Clergue concurred with this philosophy of market liberalism: “Let the governments, by judicious general laws and by special grants of wild lands where justifiable, tempt the capitalist and the manufacturer to establish works for the utilization of these Canadian raw materials,” he would remark in 1901, “and then they will have established an agency for immigration more efficacious than a legion of lecturers and a million maps.”
The basis of correlation at the Sault was the Lake Superior Power Company, whose facilities were enlarged to generate 20,000 horsepower of hydroelectricity for a cluster of connected industries. To supply community needs Clergue set up the Tagona Water and Light Company. Almost immediately he began to add other enterprises. The Sault Ste Marie Pulp and Paper Company was created in 1895. Aware that iron and steel were at the heart of any industrial economy and that a flood of cheap imported steel had hitherto inhibited local manufacture, he set his sights on convincing Ottawa and Queen’s Park that the alloy could be made in Canada. The discovery of hematite ore north of the Sault near what is now the town of Wawa in 1897 prompted him into action; he bought the claim and developed it into the Helen mine, named after one of his sisters. To exploit the resource and allow access to the rich forests in the hinterland, he incorporated the Algoma Central Railway in 1899 (it would become the Algoma Central and Hudson Bay Railway two years later). This company established a fleet of steamers to bring raw materials to the Sault and transport the finished products to southern markets. Among other associated entities were a transit company, another railway pushing east towards Manitoulin Island, and a sulphite pulp mill using sulphurous acid, a by-product of the Sudbury nickel mines. At the centre of Clergue’s industrial complex was the Algoma Steel Company, incorporated in 1901, for which he erected blast furnaces and Bessemer converters.
The capstone of the Sault industries was the Consolidated Lake Superior Company, an umbrella organization designed to orchestrate Clergue’s different ventures. Incorporated under Connecticut law with a capital of $117 million (U.S.), it had as its principal asset a controlling interest in the subsidiary enterprises. Most of the company’s common shares were held by major investors in Pennsylvania and New York. In an era of virtually no regulatory oversight and uncritical financial journalism, few questioned the intrinsic worth of Clergue’s empire, although rumours suggested that it was closer to the $84.3 million declared value of the pre-consolidated subsidiaries. Any hint, however, that the stock had been watered was eclipsed by the rapid expansion of the industries in the Sault.
Clergue proved a past master at currying favour with Canadian politicians. Both Ottawa and Queen’s Park endowed the Algoma Central and Hudson Bay Railway with cash subsidies and land grants. He argued that for steel making at the Sault and elsewhere in Canada to succeed, plants must operate at full capacity. His federal backers included cabinet minister Joseph-Israël Tarte* and Senator Raoul Dandurand*, and by the time the steel works were completed in 1902, he had convinced Sir Wilfrid Laurier*’s minister of railways and canals, Andrew George Blair*, to sign a contract with his consortium to produce rails for the Intercolonial Railway and mandate Canadian-made ones for all federally subsidized railways.
Clergue’s associated industries, stretching from the iron mine and forestry operations in the north to the steel and paper mills beside the St Marys rapids, now employed 7,000 workers. New Ontario had become a reality. His name was synonymous with the burgeoning growth of Canada’s economy and national confidence. For Principal George Monro Grant* of Queen’s College in Kingston he was “the Jason of the Algoma.” “His well-disciplined mind, scientific knowledge, calm, tireless enthusiasm,” Grant wrote, “along with remarkable powers of exposition, made me say ‘There is no such word as impossible in the dictionary of this man.’” New York’s Cosmopolitan magazine would later laud the industrialist as “this Napoleon of promoters.” He reciprocated by delivering hortatory speeches to boards of trade and lavishly entertaining his financial and political backers with fine food, brass bands, and fireworks.
But soon cracks began to appear in Clergue’s edifice. For all the talk of correlation, the Sault industries were never a model of industrial synthesis. Algoma Steel, for instance, was unable to produce steel in one seamless process from ore to final product; its Bessemer converters were operational before its blast furnaces could supply pig iron for the steel-making process. Much to Laurier’s annoyance, by September 1903 Algoma had supplied only 1,243 tons of rails. “The more the affairs of the Lake Superior company are looked into,” the Toronto Daily Star complained, “the more appalling appears to have been the waste of money.… Mr. Clergue’s genius is solely a genius for spending money.” As the industrial complex struggled to turn a profit, its dubious financial underpinnings became apparent. In 1902 the Consolidated Lake Superior Company had contracted a $5 million (U.S.) loan with the Speyer and Company of New York, in which several other American and Canadian institutions were involved. By September the following year the company was unable to service this loan, against which the assets of its subsidiaries were pledged. Newspapers reported that it had liabilities of $11 million (U.S.). After the company failed to meet its payroll and shut down the plants, many of its workers rioted on 28 September, rampaging down Sault Ste Marie’s main street. More than 350 militiamen had to be brought by train from Toronto to quell the “smash up.”
Fearful that Speyer would auction off the Sault industries piecemeal, Ottawa and Toronto scrambled to shore up Consolidated Lake Superior’s finances. Queen’s Park guaranteed overdue wages, while Laurier’s emissaries visited England and the United States to assure investors that Ottawa still had faith in the enterprises. Despite these efforts, Consolidated was put into liquidation on 14 December. Over the next months Clergue attempted to reconstruct the company under the sceptical gaze of Canadian politicians and American investors. In February 1904 a new entity, the Lake Superior Corporation, emerged, chartered in New Jersey and with its head office in New York City. Much of the water in the old company’s capitalization had been squeezed out, but even so the Ontario government of George William Ross* was obliged to furnish a $2 million loan guarantee to the Algoma Central and Hudson Bay Railway to anchor the reorganization. The province, the premier told the legislature, could not afford to see “a series of cognate industries” fail in New Ontario.
The events of 1903 stripped Clergue of his mystique. Charles Douglas Warren, a Toronto promoter, was made president of the new corporation, and Queen’s Park appointed three directors (including Toronto lawyer Newton Wesley Rowell*) to its board. Clergue remained a member but was no longer central to decision making. Five years later he was dropped as a director, and his official association with the Sault industries came to an end. Despite the reconfiguration, the businesses continued to struggle until the Great Depression pushed them into bankruptcy. They would eventually re-emerge as a series of autonomous enterprises in the mid 1930s as a result of draconian measures imposed by Sir James Dunn, now a prominent financier.
Clergue never lost his entrepreneurial drive, however. He re-established himself in Montreal, where he acted as a freelance industrial consultant and promoter. His firm, the Universal Engineering Corporation, provided a platform for a number of ventures, none of which ever flourished as the Sault industries had briefly done. Clergue also became president of Universal Transmission Limited and the Waterbury Tool Company, an American firm that produced hydraulic equipment, which he marketed as far afield as Japan and Germany. In 1912 he tried to interest the federal government in the North Railway, a new line that would connect Montreal to James Bay and run across Canada along the 60th parallel. During World War I he joined the board of the Canadian Car and Foundry Company and spearheaded its attempt to sell munitions to imperial Russia. In the 1920s Clergue became a lobbyist for the enlargement of the St Lawrence waterway. Following the Japanese invasion of Manchuria (People’s Republic of China) in the 1930s, he tried to sell Canadian railway equipment to the region’s puppet government. In all these schemes he seemed dogged by the stigma of the Sault collapse. His promotions were often prescient – the federal government would indeed build a railway west from James Bay in the 1920s – but few people were prepared to trust Clergue. “It has been said of him,” Prime Minister William Lyon Mackenzie King* recorded in his diary after meeting him in 1936, “that he has tried to pull the legs of most Governments in Canada but has never been able to reach Mr. Bennett or myself.”
Others were more positive. Alan Sullivan, a friend and former engineer at the Sault who had greatly admired his employer, published a thinly disguised depiction of the industrialist in his novel The rapids (Toronto, 1922; repr. 1972), and in 1937 the citizens of Sault Ste Marie honoured Clergue’s association with the town’s renaissance by unveiling his portrait in the city hall. A local high school would also be named after him.
Tall, moustached, barrel-chested, and with a stentorian voice, Clergue left an indelible impression on those who met him. He loved to recite verse and was a gifted piano player. Never married, he doted on his family, moving his parents to the Sault, where he installed them in a splendid house he had built. In later years he maintained a farm in Quebec’s Eastern Townships, which he incorporated as the Montfermier Corporation to sell gravel. There he successfully acculturated the red Delicious apple to the eastern Canadian climate.
Francis H. Clergue died on 19 Jan. 1939 as a result of pneumonia following a heart attack and was buried in the family plot in Bangor. He bequeathed his entire estate to his sister Gertrude Alice. The Montreal Gazette commented on his passing by quoting industrialist George Edward Drummond*, who had earlier called Clergue the “Cecil Rhodes of Canada.” Indeed, he epitomized the creativity of industrialism in the heady Laurier years in Canada, but he also exemplified the underlying recklessness of finance capitalism.
Speeches by Francis Hector Clergue were published as An instance of industrial evolution in northern Ontario, Dominion of Canada … (Toronto, 1900), Address … (Sault Ste Marie, Ont., 1901), and Address delivered … (Sault Ste Marie, Mich., 1901). The Sault Ste Marie Public Library Arch. (Ont.) holds a collection of Clergue family papers and memorabilia (1994.4), which includes an unpublished biography of Clergue by E. Alan Sullivan entitled “Before the tide,” and fonds of the Algoma Steel Company Limited (996.9.8) and a number of Clergue’s other businesses. The papers of Sir Wilfrid Laurier (R10811-0-X) and Sir James Hamet Dunn (R5259-0-5) at LAC contain many documents relating to Clergue’s interactions with the federal government and the international business community.
Gazette (Montreal), 20 Jan. 1939. Toronto Daily Star, 26 Sept. 1903. P. D. Bachelder, Steam to the summit: the Green Mountain Railway, Bar Harbor’s remarkable cog railroad (Ellsworth, Maine, 2005). Michael Bliss, “An introduction,” in [E.] Alan Sullivan, The rapids (Toronto, 1972), v–xx. Donald Eldon, “The career of Francis H. Clergue,” Explorations in Entrepreneurial Hist. (Richmond, Ind.), 3 (1950–51): 254–68. [G. M.] Grant, “The Jason of Algoma: an account of the wonderful industrial development in New Ontario,” Canadian Magazine, 15 (May–October 1900): 483–94. Duncan McDowall, Steel at the Sault: Francis H. Clergue, Sir James Dunn, and the Algoma Steel Corporation, 1901–1956 (Toronto, 1984). H. V. Nelles, The politics of development: forests, mines & hydro-electric power in Ontario, 1849–1941 (Toronto, 1974). W. R. Stewart, “Francis Hector Clergue,” Cosmopolitan (New York), 36, no.2 (December 1903): 179–83. Margaret Van Every, “Francis Hector Clergue and the rise of Sault Ste. Marie as an industrial centre,” OH, 56 (1964): 191–202.