by Bruce Cherney (part 7 of 7)
It is estimated that only about five per cent of those who speculated in property made money during the great land boom of 1881-82. Too often, the collapse left people destitute by saddling them with large debts on paper that they were
unable to repay.
There were those who issued early warnings about a looming crisis, such as the editor of the Ontario-based Bobcaydeon Independent. But the December 24, 1881, Free Press dismissed the
editor’s “utterance” about a real estate bubble bursting as being written by an “egotistical jackass or a maudlin crank.”
The editor in Ontario wrote that the gambling in real estate had driven prices so excessively high “that a crash is inevitable, and the fall will bring ruin upon many of them ... The Winnipeg crash may not come next year (it did), but it is looming up through the not very distant future, and when it does come it will be one that will bring ruin and desolation to thousands.”
The editor’s prediction would be fulfilled within four months, but no one in 1881 Winnipeg was willing to believe in such a dire prediction. By the time the
realization arose that there was truth behind the warnings, it was simply too late to take action to prevent the ruinous
impact of the crash.
Robert Hill, in his book Manitoba, wrote that men who had been “deemed honest and good for any amount, were turned out of house and home, their goods and chattels liened on and sold by the sheriff, in many cases not bringing the latter’s fee.”
The case of one man — Josh Callaway — provides an example of how the collapse of the boom brought grief to would-be speculators. Bob Cartwright, an Ontarian, had bought a share in a syndicate formed to sell St. James land from Josh Callaway, who reserved 61 acres for himself, while the other 300 acres was set aside for a syndicate. The total price to be paid by Callaway was $75,810. Callaway, who paid $210 an acre for the land, knocked off $100 from the proposed price of $450 an acre that the
syndicate would be seeking. Callaway gave Cartwright the same terms as he had secured for the obtaining land — one-third in cash and the rest to be paid in
one- and two-year terms at eight per cent.
Cartwright agreed, but was only able to make a $10,000 down payment and told Callaway he would write to his father, Sir Richard Cartwright, for the remainder in order to obtain his half interest in the property. In the meantime, Callaway went to Ontario to bring his family to Winnipeg. When he returned, the boom had bust and he was informed the syndicate didn’t intend to pay up nor did Sir Richard.
“I had that property on my hands with $54,600 to meet,” Callaway told a reporter for an article that was published in the Winnipeg Tribune on June 30, 1906, “but I lived in the hope that the boom would revive so I hung on tight onto the property.”
The boom didn’t revive and Robbie Tait, who had sold the property to Callaway, asked for a second payment. Callaway told him he had already paid enough for the property and wasn’t going to pay more.
“It’s all the property is worth now,
anyway,” said Callaway.
But Tait was unmoved and took the matter to court, which ruled in his favour, issuing a judgement of $60,000 against Callaway. The new Winnipegger said he could have withstood this blow, but what happened next made his blood boil.
“When the mortgage came to be foreclosed and the stuff ordered to be sold,” said Callaway, “blest if Sir Richard Cartwright didn’t come up quietly and instead of coming to me, went to Robert Tait and bought the mortgage of $60,000 for a paltry $18,000. I lost $32,648
besides the expenses involved in the court proceedings.”
Although Cartwright was effectively a victim of the boom’s bust, he persevered and retained possession of 300 acres of the land he had bought near the end of the boom. In 1906, he sold the property to a syndicate headed by Thomas Ryan for $650 an acre. The newspaper said Cartwright was now on “Easy Street.”
Another Winnipegger, who had saved a considerable sum, succumbed to the temptation of investing in city lots during the boom, “and now has to bemoan the loss of all his money,” according to a January 9, 1883, Free Press article. “He now has nothing to fall back upon, the pecarious living afforded by apples and the like, being now utterly inadequate to the support of himself and his family. He is now reduced to the last extremity and states that he is literally starving.”
James Scott, who was described by a newspaper columnist as a “legitimate promoter of farm lands,” — he also owned a 500-acre farm in Headingley — even at the height of the large-scale land speculation, related that the collapse of the boom meant people fled Winnipeg in droves. Rents tumbled and real estate agents gave up their offices through lack of business. Some teamed up with others in similar
circumstances to rent offices and save on expenses.
He noted that rents for offices shrank from $100 a month to $15. House rents went from $50 to $20, and when the population further decreased, rents fell to $10 and eventually as low as $5 a month.
“Banks shut down on customers who dealt in real estate, and finally got so nervous that they would scarcely give accommodation (credit) to their mercantile customers.”
An editorial in the January 8, 1883, Manitoba Free Press indicated that even the city has having difficulty obtaining funding from the banks.
Bryce, in his series of Manitoba Free Press articles, entitled, The Illustrated History of Winnipeg, on October 28, 1905, wrote that properties dropped in value to “one-third the amount of the mortgages upon them ... Owners could not extricate themselves. There was naturally little demand, consequently there were few sales ...
“Mortgage sales filled the advertising columns of the newspapers, nightly sales of bankrupt stocks were taking place, and legitimate trade was disturbed by the slaughtering caused by business failures ...
“Men who lived in the winter of 1881-1882 in a dream of oriental magnificence, now dwelt in the winter of 1882-1883 in the sad valley of humiliation,” added Bryce.
A recap of 1882 in the December 30 Free Press, bemoaned the disruption caused by the boom, which was a far cry from the newspapers’ own boosterism during the time of speculation gone wild.
“While it lasted,” according to the newspaper, “it thoroughly demoralized trade in the city; men left legitimate trading to set up real estate offices ... The stories of the immense fortunes made in a day were passed from mouth to mouth, and heralded in newspapers until hardly a city, town, village or township in the
Dominion (Canada) escaped infection from ‘Manitoba fever.’”
The recap stated that throughout February and March “the wildest excitement prevailed. But it was plain to many that the tension could not last longer ...”
The latter statement shouldn’t include the Free Press of that period, since it
continually attacked others, such as the Ontario newspaper editor, who said the boom was doomed to go bust. Hindsight and the passage of time are the great
motivators when it comes to ignoring past transgressions.
In addition, rather than “many,” few actually anticipated the crash.
The newspaper acknowledged the end came because of the overall impact of the spring flood, including the blockage of the CPR tracks to rail traffic.
With the collapse, real estate brokers closed their offices. “People began to turn away from wild-cat schemes to productive employment,” according to the newspaper.
“Banks and other financial institutions which had encouraged and fostered the reckless inflation of boom days,” wrote the Winnipeg Board of Trade in its 1884 annual report, “were now mercilessly exacting in their demands, and many a man, who in a more confident state of trade could have weathered the pressure with honour, was forced to insolvency.”
Auctioneer Joseph Wolf, who had invested so heavily in Winnipeg and Manitoba properties, was among those bankrupted by the collapse, as was the colourful James Coolican.
“Then the lawyers, bailiff and sheriffs began to get their innings and soon nearly all of us had judgments enough piled up to paper a good sized room,” reported Scott.
“No use to borrow from your neighbor, all of them were in the same fix, all we could do was plod along, wear out our old clothes, then take our Sunday ones, make the young children wear the older ones’ clothing, and make suits for the older ones out of dad’s cast off pants or mother’s old dresses.”
Wholesale and retail trade was in the doldrums. Still, once the speculators were weeded out, the normal business of building a city continued. The physical volume of construction in 1883 was higher than during the boom — primarily a carryover of plans made in 1882 — but lower in value as property prices had significantly declined.
The population of the city fell to around 20,000 people by 1883, as an
estimated floating population of 10,000 fled Winnipeg when the bubble burst. As a result, there was an abundance of vacant houses in all parts of the city.
“How we came through it all,” wrote Scott, “the Lord only knows, but the gravestones in our cemeteries bear testimony to the loss of many, while the grey hairs of the rest tell of the struggle we came through, but the hardest of all hard sights was to see the housewives, whose husbands, in their prosperity, had lavished on them silks, satins, velvets and sealskins doing their own housework in these same costumes, their commoner ones having been worn out, and no money to be had to buy even a print wrapper.”
An editorial in the January 19, 1883, Free Press mused about the future progress of the northwest, concluding that prospects were good. “We need not expect to see a recurrence of the famous ‘boom’ in real estate which ushered in the past year, and for various reasons it is well that this is so.”
The editorial stated that, “Less feverish, less heedlessness in the investment of money,” should be replaced by a concentration on developing the region’s natural resources, including mining and agriculture.
Scott said that he could count on one hand the number of real estate agents who survived the crash and remained in Winnipeg in 1906 — they were Mark Fortune, Thomas Crotty, John Somerset Aikins, Donald Andrew Ross and himself.
It took time, but the Winnipeg Real
Estate Exchange (today’s Winnipeg-
REALTORS®) was formed in 1903 to bring greater sanity to the real estate market. Among the founders of the exchange were the few survivors of the great land boom that went bust. No one wanted a
repeat of what happened in 1881-82, which was one of the reasons that the
exchange was established.
As stated in the April 30, 1903, Manitoba Free Press: “Weekly meetings will be held, and at them a definite basis for land values will be arranged, so that prices of lots in each locality will have a uniformity which they now lack.”
And, of course, the method of selling properties through an auction, which partially contributed to so many over-inflated bids in 1881-82, was abandoned a long time ago.
In his book, The New West, published in 1888, George Henry Ham, a journalist who came to Winnipeg in 1875, wrote that “a year or two after the depression, Winnipeg commenced once more to assert itself, confidence — not altogether lost — was fully restored, and, in quiet, business-like manner, the city began to prosper again on a solid foundation.”