How the rich captured a Canadian prime minister

By Dean Beeby

March 2025

(Also available as a PDF here.)

William Lyon Mackenzie King (left) shakes hands with Peter Larkin in London, England, 1923.

Vladimir Putin’s Kremlin and Donald Trump’s White House have shown how political leaders who bond with billionaires can be toxic to the public good.

Canada so far has avoided devolving into a plutocracy, but some of our past leaders have nevertheless been compromised by powerful men bearing suitcases stuffed with money.

Several prime ministers have accepted generous handouts from business titans over the years, though none so brazenly as William Lyon Mackenzie King (1874-1950), Canada’s 10th prime minister.

King’s personal worth was secretly goosed from modest in 1923 to princely by 1929, as a gilt-edged roster of Canadian business tycoons showered the new prime minister with cash, bonds, stocks, silverware, fine china and much more – transforming a man of ordinary means into a bona fide millionaire over a few short years.

The exact sources of this shady largesse, as well as its full dollar value, have been poorly reported in Canadian history texts, partly because the rich know how to cover their tracks.

But previously untapped files at Library and Archives Canada finally provide a grand tally – and the identities – of King’s monied benefactors. The details raise troubling questions about just what the rich stood to gain from their generous gifts to the country’s longest-serving prime minister.

King grew up in a financially strapped family. A hard worker, he was a diligent student, eventually a PhD at Harvard. He joined the federal public service in 1900, soon to become a deputy minister.

In 1908, he became a Liberal member of Parliament and joined the cabinet. Talent-spotters and friends ensured he became Liberal leader in 1919, returning the party to office in the 1921 election. He had power but no money. That soon was to change.

King’s lucrative decade of wealth accumulation kicked off in 1921, with the death of Zoe Laurier, wife of King’s beloved mentor, Wilfrid Laurier, the former prime minister who died in 1919. Zoe willed the couple’s home in Ottawa to King personally.

Laurier House, as it was known, was a shambles. King’s sensible friends suggested tearing it down and rebuilding, but sentiment for Laurier prevailed. King preferred that the brick home in the Sandy Hill neighbourhood – acquired by rich friends for Laurier in 1897 for $9,500 – should be preserved, renovated and refurbished. Alas, King’s salary of $10,000 left him no margin to do so.

Zoe’s gift thus became a catalyst for Canada’s business elite, who rallied to underwrite the costly upgrading. Originally estimated at $30,000, a full accounting in King’s papers shows the Laurier House renovations grew to more than five times that figure.

A Dec. 31, 1925, balance sheet shows more than $160,000 was spent on architects, carpenters, electricians and others, a budget-busting makeover worth about $2.8 million today.

List of donors and expenses for renovating Laurier House in Ottawa (Library and Archives Canada, MG26 J11)

The accounting also names 23 Canadian businessmen who paid for those renovations, and two mystery donors listed as anonymous. Heading the roster was Peter Larkin, the Salada tea magnate and King’s close friend, who chipped in $10,000 and helped marshall the contributions of fellow business titans.

“I tremble to think of what the ‘Commoners’ would think of their Leader amid so much grandeur,” King wrote to Larkin on Jan. 14, 1923, after spending his first night in the now-opulent mansion.

Larkin had supported King’s political career, and was rewarded with a 1922 appointment as Canada’s High Commissioner in London. On his way to the office each morning, Larkin would stop by the posh auction houses of Christies and Sothebys to order fine furnishings that would be shipped to King’s new Ottawa home.

Larkin, who complained it was “impossible” to maintain his own London mansion on $100,000 a year (about $1.7 million today), underlined to all benefactors that the house and its furnishings belonged personally to his friend, rather than to the Liberal Party. Larkin did not want the money going to “some indefinite person who may appear on the horizon a year, five or twenty years from now,” he told a prospective contributor.

Larkin wrote to King: “Of course all these things are for your own service and are your own property, including the silver. On every piece of the latter your initials will be engraved.” King replied: “I shall ever feel a deep obligation to you.”

The two busy men carved out time to exchange detailed home-decorating ideas: where to put furniture, layout of the library, what art should decorate the walls. After all, King needed an elegant, stately home at which to entertain visiting dignitaries, and the prime minister had no wife to help him.

Larkin also micromanaged the architects, insisting, for example, on a blueprint change that would put two electric lights in each bathroom. “There is nothing so provoking as not to have good light on both sides of the face when shaving,” he said.

Through it all, King was kept aware of which captains of industry were picking up the bills – bankers, manufacturers, investment dealers, mercantilists. In a letter to Larkin, the prime minister called the largesse “manna” from heaven. More manna was on its way.

Larkin saw Laurier House as a white elephant that King – “with no financial resources,” as he put it – could ill afford. “I am afraid we are very much like the generous man who presents a Rolls Royce car to a fellow with a limited salary.”

Larkin wrote to well-heeled banker William Ross, who contributed $25,000 to the renovations: “I do not believe our friend can live in that house in an easy frame of mind on his income.” (King later handed Ross a patronage plum, appointing him lieutenant governor of Ontario.)

Larkin set about creating a trust fund for King that would underwrite his new lifestyle. He enlisted Ross as bagman, since Larkin’s job as High Commissioner in London kept him out of the country. The goal was to create a big enough nest egg to generate $7,000 to $10,000 of income each year.

Larkin launched King’s fund with $25,000 of his own cash, deposited Sept. 22, 1925 at the Old Colony Trust Co.’s main branch in Boston, the same firm used by Salada Tea for its U.S. operations. Likely he reasoned that a foreign account would reduce the risk of discovery.

Recorded as the Laurier House account, the assets were nevertheless in King’s name and under his control. The prime minister was given regular statements and a cheque-book. Old Colony confirmed in writing that the money was King’s “personal property.” He could withdraw, invest or buy new property. King did all of that.

William Ross was a mediocre bagman, so Larkin eventually took over fundraising. He was fabulously successful. A detailed tally sheet in the archives shows 17 business leaders and two corporations collectively pledged $250,000. Almost all had delivered the assets by the end of 1928.

List of donors to the Laurier House fund (Library and Archives Canada MG26 J11.) Cash-strapped Joe Atkinson did not pay as promised. The ‘guineas’ referred to gold coins distributed to donors in recognition of their contributions.

The lone holdout was Joe Atkinson, president and owner of The Toronto Star, which backed the Liberal party. Atkinson had promised $25,000 but was short on cash after paying for a new building and printing plant. He reneged. “[W]e have spent a great deal of money and I don’t know how long it will be before we get our head above water,” he disclosed to Larkin.

Even so, the Laurier House account brimmed with assets of $225,000 by early 1929, mostly in cash and bonds with a few stocks. King was over the moon. “It has gone away past anything of which I have ever dreamed,” he wrote. This was no blind trust. Larkin gave King the names of the wealthy donors, whom he called a “band of good fellows.” It was a who’s who of the moneyed class.

In appreciation, Larkin sent each donor a Charles II guinea, a relatively rare 17th-century British gold coin. Investment dealer Alfred Ames (who had put a paltry $2,500 into the fund) dubbed the group “The Order of the Guinea.” King’s five-guinea piece, a gift from Larkin, made him head of the order.

King was kept aware of Larkin’s progress in building the fund, and knew who was being approached. King kept donor lists, in his own crabbed handwriting. He spoke personally with contributors, thanked them profusely, avoiding written records of his gratitude.

Larkin confessed to King in February 1929 that “you are not supposed to know who are the subscribers.” But he had regularly violated that principle, sometimes coyly. “Our Montreal friend” in one letter referred to donor Wilfrid McDougald, whom the prime minister had appointed a senator in 1926. King was well aware in 1927 of McDougald’s initial $10,000 donation to the Laurier House account, and of McDougald’s final $15,000 tranche in 1928, which he called a “magnificent figure.”

The total of all contributions for renovations and for the fund was now at least $385,000 (or $6.7 million in today’s dollars), assembled in a mere six years.

Larkin’s further gifts of money and merchandise boosted the total. He had six brass bedsteads built expensively in England, and shipped to Laurier House. There was more English silverware, engraved with King’s name, and a “pearl pin.” Sir Wilfrid Laurier’s nephew Robert had failed to pay the 1922 city taxes on Laurier House, where he lived for a time. Larkin covered King’s unexpected $1,000 municipal tax bill, as well as the inheritance tax on the property. The grand tally to King’s benefit may never be calculated.

Larkin justified the handouts by arguing they were the opposite of bribes. Rather, they guaranteed King’s independence, he said. Otherwise the prime minister’s modest means would distract him from governing, and leave him susceptible to rich men seeking favours. He told King the donors expected nothing in return.

Coded telegram to King from Larkin. Note the decoding in pen: “Bonds from [E.R.] Wood forwarded me evidently in error (stop) am forwarding them to day through Royal Bank to Old Colony Trust”

Precautions were taken to keep the Old Colony account secret. The King files include a 1927 transatlantic telegram (illustrated above, MG26 J11) addressed to him written in code, referring to financier Edward Wood’s recent $15,000 donation. Larkin asked McDougald to contribute only cash, to thwart a paper trail. Even so, rumours of the fund inevitably spread. In May 1929, the Toronto Star reported on its existence, without listing the donors, to no apparent controversy.

Such funds were not uncommon at the time, in Canada and in Britain. King’s justice minister, Ernest Lapointe, was set up with $100,000 by supporters, for example. But King’s political instincts told him that public knowledge about his silk-stocking backers could be dangerous. He wrote to Larkin in early 1929:

“I have wondered whether the fact that each contributor has the names of the others in his possession, and in a document which may fall into the hands of third parties, might lead to the entire list being given publicity, or to some of the names on the list becoming known, at a time and in a measure which might seem to occasion embarrassment to the Government or myself.”

The complex Beauharnois Scandal of 1931 stoked King’s worst fears. McDougald had profited from a 1929 cabinet decision, and King worried that “our Montreal friend” might spill the beans about the trust fund in testifying before a Parliamentary committee. McDougald never ratted, but King lost sleep. As a precaution, he returned $15,000 of McDougald’s money, though inexplicably kept the other $10,000. King always denied he had given McDougald any special benefit.

In 1925, when it wasn’t clear King would survive as prime minister, donors were “waiting … to see which way the cat jumps,” Larkin wrote. They preferred to support a head of government rather than a losing politician. King in fact did forfeit government in the King-Byng affair, but was returned to power in the Sept. 14, 1926 election – shortly after which the flow of trust donations resumed. King the prime minister, not King the man, was the coveted trophy.

The King papers at Library and Archives, and King’s own diaries, contain no obvious evidence of bribes, actual or attempted. But such neat quid pro quos may be too crass a metric for assessing influence-peddling. Certainly King rewarded Larkin and Ross, the two bagmen, with vice-regal appointments, but the salaries were pitiable and the positions had little power. Indeed, Ross got hammered by the stock-market crash of October 1929 and gave up his post as Ontario’s lieutenant governor because the pay was too low.

The real prize for a wealthy donor was having a prime minister in the pocket, someone alert to the special needs of business. A friend at the apex of government could bat down proposals that might harm profits. A powerful leader on the take would be an insurance policy against state measures damaging to commerce.

King’s secret dalliance with wealthy barons has drawn fire from some modern historians, a few suggesting bribery was in play. Others defend King, arguing there’s no smoking gun and trust funds then were commonplace. It’s unlikely we’ll ever see hard proof of any malfeasance that was hatched behind closed doors, in executive suites, corridors or gentlemen’s clubs. We’ll probably never know what favours, if any, were bought and sold. Consider that it has taken most of a century even to learn the names of the players.

One thing is certain: then and now, the fabulously wealthy typically want to insinuate themselves into government, believing that business acumen is a sufficient qualification for public affairs, and that their agendas are naturally in the best interests of the country. The Order of the Guinea is a timely reminder that Canada needs tough laws and regulations, open and accountable governments, and a thriving press, to keep them at bay.

Sources:

This article draws primarily on records in Library and Archives Canada: MG26 J11 Containers 5 & 6; and MG26 J13 (King’s diaries, also available online).

The best modern biography of King is Alan Levine’s King: William Lyon Mackenzie King: A Life Guided by the Hand of Destiny (2011). See also Levine’s article for the Globe and Mail on secret funds and prime ministers.

My thanks to colleague Mario Possamai for invaluable research suggestions.