Promoting industry with municipal loans and grants was a popular practice in Ontario during the years after 1870. On the whole, though, it proved to be, with a few exceptions, a course fraught with peril. Several towns in Wellington County found themselves in financial difficulties when such investments turned sour, and most others had bitter experiences through such bonusing of industry.
Most entrepreneurs seeking aid were undercapitalized or inexperienced in their chosen line. Not a few were termed “bonus hunters.” They would move to or start up in any town that offered them money.
This method of financing industry fell out of favour by the First World War, but there are some examples of its persistence after that time. One of the best examples locally is that of Mount Forest, which considered helping a couple of industries in 1923.
In 1919 a man named Steinberg came from Winnipeg to set up a woolen factory in Mount Forest. He had little money, and at that time asked Mount Forest council for $5,000 in help to finance the move. Steinberg also sought to sell $20,000 of stock in his company, called the Superior Knitting Mills.
His success in selling stock is not known, but he did get a loan approved by council, and subsequently by taxpayers in a plebiscite, as was required at that time. Superior Knitting moved into the upper floor of the Mount Forest Carriage Factory building, which was struggling along in the face of overwhelming competition from automobiles.
Steinberg’s operation was a success, though a modest one. He suffered from dropping prices in the economic turmoil and collapsing exports of the postwar years, and suffered a strike by workers who were struggling with the rapidly rising cost of living. He had trouble finding employees, and conditions in the plant were difficult. It was virtually impossible to keep the building warm in winter.
In 1923 Steinberg purchased the building on the main street that had been used by the Canada Furniture Company, and before that, the Weir Wardrobe Company. It had been vacant for a decade. He spent $10,000 for the building and the equipment in it. Steinberg estimated that another $5,000 would be needed for repairs and refitting.
Meanwhile, W.H. Steele, who owned the Mount Forest Carriage Company, asked Mount Forest council for a loan of $20,000 to re-equip his factory. He was rather tight-lipped about his plans, but he planned to expand into farm implements and automotive parts. It was a difficult situation. Steele was also a member of Mount Forest council. He did not attend meetings where his bonus bylaw was under consideration, but the conflict of being a councillor and a significant potential beneficiary of council actions greatly annoyed his colleagues.
After much wrangling and discussion, council eventually prepared a bylaw that would loan Steele $20,000 at 5.5% interest, repayable in annual installments over 10 years. But the final council vote, to authorize a plebiscite on the measure, fell to defeat. Furious, Steele denounced his colleagues in public for their failure to promote local initiative and industry. Two weeks later he presented his resignation to his council colleagues.
At a council meeting the day before Steele’s resignation , council received the request for aid from Steinberg. He was asking for $14,000, on terms similar to those considered for W.H. Steele’s loan. Council appointed a committee to consider the proposal and draw up a draft of an agreement. That had been the final straw for Steele. He believed that Steinberg was receiving more favourable treatment than he had.
The factionalism that resulted undermined council solidarity and trust during the rest of that year and the next. Particularly galling to Steele was the speed with which they were proceeding.
On his side, it must be said that Steinberg seemed sincere and open. He explained to council the difficult position of his firm, facing declining markets and rising costs. Nevertheless, he told council, he could produce more if he had the space and employees.
There were currently 48 employees, and he had orders on his books for $70,000 in goods. He said that the conditions at the current location were difficult for his workers, most of whom were women, and that the old furniture factory was inconvenient for them, cold, and drafty. Steinberg claimed, probably with some exaggeration, that he was paying $8 per week for new employees, and $15 to $20 per week for experienced employees. He concluded by saying that he had every cent of his personal assets invested in the business, and that several Mount Forest residents had major stakes as well.
Council adjourned on May 7 with instructions to the clerk to prepare the necessary bylaw for a special meeting the next night. The clerk had a busy day: he also had to sort out details of how to deal with an outstanding partiallyunpaid loan granted years before to the Canada Furniture Company on the building.
Council, on May 8, passed a motion absolving the Canada Furniture Company of all liability on the outstanding loan. They also approved the plebiscite, to be held the last week of June, and appointed various officials to supervise the special vote. The campaign was a lively one. The Mount Forest Board of Trade and the Business Peoples Association held a breakfast meeting on June 4 to discuss the aid to Steinberg. Executive members drafted a list of reasons to support the loan, which was published and circulated widely. The circular noted that an increased payroll would be good for local retailers, and for the construction of new houses. The Canadian Furniture Company, the current owner of the building, had stated that the building would be demolished if it could not be sold. The company wanted to get rid of the burden of property taxes on the structure it no longer used. The circular included a financial analysis of the situation, which showed that the impact of the loan on individual taxes would be minimal.
Hanging over the campaign was the decision council had made to reject outright the other request for aid. As the campaign for approval carried on through June of 1923, editor A.W. Wright finally spoke up. Initially he had stated that he wished to avoid anything of a controversial or contentious nature, but on June 14 he ran an editorial criticizing council’s decision to reject the aid measure to A.W. Steele. He claimed that personal animosity, rather than the good of the town, was behind that rejection, and that in the end neither of the aid measures considered that year would cost the town one cent.
Mount Forest ratepayers approved the loan to Steinberg and the Superior Knitting Company by a margin of 315 to 115. It was a sizeable rate of approval, but nowhere close to the near unanimous margins that had once been achieved in such measures. At the first meeting after the vote, councillor Young appeared with his lawyer in tow. He claimed that there were several irregularities in the vote for the Superior bylaw. Council refrained from final approval that night, presumably so they could seek their own advice the next morning. In the end they seemed to be convinced they acted correctly. The following night they met again to give final approval.
But the saga was not yet over. (Next week: the saga of industrial aid in Mount Forest continues.)