The Pacific Scandal was the result of solicitation by PM John A. MACDONALD, George-Étienne CARTIER, and Hector LANGEVIN of some $360 000 in campaign funds for the August 1872 general election, from promoters including Sir Hugh ALLAN. Macdonald and his Conservative colleagues needed money to fight the elections in Ontario and Québec, where a number of seats were in jeopardy. Notwithstanding his bribery of electors, Macdonald did badly, his 1867 majority being substantially reduced.
After the election Allan was rewarded with the contract to build the Pacific railway, on the assumption that he would divest himself of American control on his board of directors. Since Allan, unknown to Macdonald, had used American money to bribe the government, this proved difficult, and finally produced blackmail. The Liberals broke the scandal on 2 April 1873; a spate of damaging letters and telegrams appeared in Liberal newspapers in July. The government was stunned. It managed to weather a royal commission struck on August 14, but it could not survive Parliament. The Commons met on October 23; with the threat of new PEI votes against it, and its supporters in disarray, the Macdonald government was obliged to resign. Allan's company never did get started, and a new agreement had to wait until 1880.