Great land boom — speculators flooded into Winnipeg hoping to make a quick buck by flipping properties

by Bruce Cherney (part 1)

From June 1881 to mid-April 1882, Winnipeg was in the midst of one of the greatest land booms in North American history. It was a time when inflated property values, brought on by widespread speculation, caused otherwise rational people to act irrationally.

Newspapers across North America and Europe proclaimed that Winnipeg was the place to be, a real-estate bonanza for quick-buck artists.

“I doubt if to-day any other city on  the continent, according to its population, can boast of so many wealthy young and middle-aged men,” said a reporter for the Toronto Globe in March 1882.

“Thousands of dollars were made by  operators in a few minutes,” wrote J.  Macoun in his book, Manitoba and the  Great Northwest, published in 1882.

What prompted the real estate boom was the railway — specifically, the arrival of the Canadian Pacific Railway in 1881. The first CPR train crossed the newly-built Louise Bridge into Winnipeg on July 26, 1881. Its destination was an unassuming 1-1/2-storey wood-frame depot at the corner of Main Street and Point Douglas Road, although there was nothing “unassuming” about the impact the CPR had on the real estate market.

When the CPR came, it spent millions on a passenger station (the land was a gift from the city), freight sheds, a roundhouse and other railway-related buildings. Winnipeg became the main supply depot for construction on the westward expansion of the CPR across the prairie. The railway brought workers and settlers to open up the New West.

Also arriving in the trains were the inevitable opportunists. Ontarians came first, followed by Americans and Europeans, all of whom heard tales of a city paved with gold.

“To the new-comer from the older provinces of the Dominion, or the old countries of Europe,” wrote Macoun, an observer of the boom, “for the first time setting foot in this metropolis of the great Northwest, the appearance of the city, the scenes witnessed on its crowded thoroughfares and in its still more crowded hotels and places of resort and business, are striking and novel. Stepping from the crowded train at the railway station, or from the steamer at the landing, a short walk brings the traveller to the principal thoroughfares of the city. At the places of debarkation from train or boat, cabmen and ‘bus’ drivers ply their vocation with lusty lungs and immense piles of baggage block every available space.

“On the sidewalks, men old and young hurry along with anxious look, usually with a roll of plans under an arm or a notebook in hand.”

In a series of letters published in the Winnipeg Daily Sun between March and April 1887, Charles Napier Bell, another observer of the boom, wrote: “At once, almost every city, town, village, and corner in the east, especially in Ontario, supplied a company, of greater or less size and importance, the members thereof contributing each a few hundred dollars towards forming a lump sum of cash, which was placed in the hands of a representative who immediately left for Winnipeg with a letter of credit covering the capital sum, with the intention of buying lots at low figures and of selling them at an advance (profit). No wonder we had a floating population of 5,000 when they came from all parts of the Dominion.”

Bell wrote that: “Many of the representatives of petty village syndicates in the east” were instructed not to spend more than a couple of hundred dollars in a real estate deal, which forced them to purchase lots far from the business centre of the city.

“It then became their interest to boom, to the greatest extent possible, suburban properties, and if blowing, misrepresentation and trickery is worth anything during a period of great excitement, these men took full advantage of it ...”

Bell explained that the syndicates worked according to a simple scheme. Several men with capital combined to purchase a lot running back a couple of kilometres from the Assiniboine or Red river. A development plan was made, “which showed an odd park or two, with beautiful laid out streets bearing, as a rule, every name given to the fair sex ...”

The plan was then copied and the syndicate was ready for business. Each member frequented the haunts of the speculative crowd, extolling the advantages of buying such and such a lot in St. James, St. Johns or Kildonan, and handing out their plans.

The syndicate then placed the plans in the hands of an auctioneer. Usually, a few lots were marked off as being sold at a private sale.

“People rushed to buy the lots, and after one or two nights’ auctions the owners of the main property sold out their interest in the remainder for a lump sum.”

“Going, Gone.” began an article in the Winnipeg Daily Sun on November 3, 1881. The article related the tale of “an hour in an auction room.” Although the article was written tongue-in-cheek “for the benefit of people outside Winnipeg,” it aptly captured the speculative fever that pulled in people from around the world to the city, all of whom wanted to make a quick buck by bidding upon and buying “a village that will grow into the magnitude of another Winnipeg.”

In 1882, one of CPR general manager Cornelius Van Horne’s first official acts was to place ads in local newspapers cautioning the public against purchasing lots based on speculative guess-work about where the CPR would set up stations along the rail route, which was a favourite ploy of the  city’s auctioneers. He said townsites would be chosen by the railway and the railway alone, “without regard to any private interests whatever.”

The best example of what Van Horne meant was the townsite of Brandon. Initially, the CPR had wanted to cross the Assiniboine River at Grand Valley. People flocked to the alleged new town to snap up lots in anticipation of a new station and crossing being built. But the McVicar brothers, who owned the land got greedy. When their selling price steeply rose at the instigation of speculators, the CPR decided on a new site a few kilometres to the west which cost the railway a pittance. Grand Valley went bust, while Brandon boomed to the satisfaction of the CPR. Whenever possible, the CPR would follow the model established at Brandon.

Van Horne’s warning was mostly ignored, especially by a gullible public willing to believe the outrageous claims of Winnipeg-based auctioneers.

“The excitement spread like wildfire all over the country. Cool-headed professors and businessmen (clerical as well as lay) left their callings in other parts of the country for the scene of the modern Canadian El Dorado,” wrote Macoun.

“Winnipeg is London or New York on a small scale,” wrote W.J. Healey in his 1927 book, Winnipeg’s Early Days. “You meet people from almost every part of the world. Ask a man on the street for direction, and the chances are ten to one that he answers, ‘I have just arrived, sir.’”

“Winnipeg was the centre of a boom, from which the evil radiated in all directions,” Alexander Begg, a local merchant, newspaperman and author, wrote in his History of the North West. “Towns were surveyed all over the Province and Territories, and lots in them were disposed of at auction at fabulous prices. The town site mania was aptly described by a railway conductor who had taken a trip to the end of the CPR track, on his return East. Asked how the country was progressing, he said: ‘Well it’s the greatest country I ever struck ... there’s a new town about every three miles from Winnipeg to Moose Jaw. Where there’s a siding, that’s a town, and where there’s a tank and a siding that’s a city.’”

It was a time when some enjoyed a precipitous climb to wealth and fame, although always looming in the background was the potential for an equally dramatic fall. “If ever there was a Fool’s paradise,” wrote George Ham in Reminiscences of a Raconteur, “it sure was located in Winnipeg. Men made fortunes — mostly on paper — and life was one continuous joy-ride.”

The auctions were held in the evening, after stores and offices had closed for the day. Macoun wrote that “the hotels and real estate auction rooms are the centres around which the great mass of people congregate. Every large hotel has a real estate office in connection with it.”

W.H. Williams of the Toronto Globe, who came to Winnipeg with Canadian Governor General Lord Lorne’s party in the summer of 1881, wrote in his diary that every evening witnessed an auction sale of real estate.

“In the hotels,” he wrote, “all the talk was of real estate. In the hallway and billiard-room of one hotel I observed no less than five groups, each made up of one intended victim, one ostensible vendor or real estate operator, and one, two or three ‘disinterested’ individuals acting parts that in ordinary confidence games would be termed the ‘cappers.’ I do not mean to insinuate, of course, that all the transactions in real estate are characterized by a given amount of rascality, but I should be very sorry to be responsible for the assertion that two-thirds of them are not ... Tonight I heard men talk about property selling on Main Street at $100 per inch.”

(Next week: part 2)