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Sir George Stephen

 Photo George Stephen, 1st Baron Mount Stephen, GCVO (5 Jun 1829 - 29 Nov 1921), known as Sir George Stephen between 1886 and 1891, was a prominent Canadian businessman. Originally from Scotland, he made his fame in Montreal and was the first Canadian to be elevated to the Peerage of the United Kingdom. He was the financial genius behind the creation of the Canadian Pacific Railway.

By the late 1860s, Stephen had become one of the foremost financiers in Montreal, forming boards and working alongside Montreal's most prominent business names. By 1873, he had become a director of the Bank of Montreal, and three years later he was elected president, in which capacity he frequently travelled to London and New York City to meet with the leading financiers there. He remained as president until 1881, resigning to turn his full attention to running the company that would build the Canadian Pacific Railway

In 1877, his cousin Donald Smith introduced him to James Hill, which led to the establishment of George Stephen & Associates, one of the most profitable partnerships in the history of North American railways. The associates were Hill, Smith, Hill's business partner Norman Kittson, and John Stewart Kennedy, an investment banker from New York. They were later joined by two more Montrealers, R.B. Angus and Duncan McIntyre.

In 1879, the syndicate purchased the struggling Saint Paul & Pacific Railroad for $5.5 million. The deal created a sensation in Montreal as it was rumoured that Stephen had used his position as President of the Bank of Montreal to obtain loans at limited rates. Stephen treated the "scribblers" of the press with contempt, but they continued to plague him and the complicated financial structures he put together. The syndicate, however, turned the St. Paul railroad around. They changed its name, restored profitability, and expanded its lines to Winnipeg. In 1885, they sold the railroad for $25 million, and such was the success of the partnership (minus Kittson who retired from business in 1881) that it had already led them to win the contract with the Government of Canada to build the CPR.

Named as the CPR's first president, Stephen oversaw the monumental task of not just negotiating a route across 2,000 miles of forests, swamps, rivers, and mountains, but also raising the necessary funds estimated at $100 million, of which at least half had to be secured. At Hill's suggestion he hired William Cornelius Van Horne to construct three major sections of the track, and his partnership with James Ross proved invaluable to the engineering success of the railway. However, by the end of 1881, Stephen admitted that the project was "assuming dimensions far beyond my calculations". He ceased all other activities, and bringing R.B. Angus to Montreal with him, they devoted all their energies to the world's second transcontinental railroad.

As Stephen purposefully did not want a long list of investors, the risks were high to all those involved, and the CPR found few takers in London and New York City. By 1883, the syndicate was straining under the huge financial obligations being called of them. Stephen was risking almost all of his fortune on the venture and even used his mansion in Montreal as collateral. Hill resigned in 1883, when he realized that his own railroad would be in direct competition with the CPR for eastbound traffic. However, through loyalty to his partners, he held on to half of his shares. Next, Kennedy resigned, depressing the CPR stock even further and making Stephen's increasingly frantic attempts to find capital even more difficult. In the face of this crisis, fellow Montrealer McIntyre resigned in 1884, forcing the other directors to buy his shares and in the process earning himself Stephen's lifelong enmity.

Using every ounce of his experience in banking, natural flair for persuasion, and business acumen, Stephen proved capable of putting together the complicated financing needed to complete the project, despite cost overruns from numerous unanticipated engineering, business, and political problems. The final piece in the financial puzzle was secured when, in 1885, he travelled to London for a personal appeal that convinced Lord Revelstoke and Barings Bank to underwrite the sale of £3 million in company stock.

On 7 Nov 1885, at Craigellachie, British Columbia, Donald Smith famously hammered home the last spike in the railroad.

Stephen, Smith, and Angus were the sole members of the original syndicate to have kept their nerve. Their gamble paid off and the success of the first leg of what would soon become the "world's greatest transportation system" almost immediately made them enormously rich - Wikipedia.

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