Book Review: How Macdougall Family Traditions Built a Business over 160 Years

Book Review

James Ferrabee & Michael St B. Harrison, Staying Connected: How MacDougall Family Traditions Built a Business over 160 Years

(McGill-Queen's University Press, 2009)

In Staying Connected: How MacDougall Family Traditions Built a Business over 160 Years, James Ferrabee and Michael Harrison examine the history of the firm, MacDougall, MacDougall & MacTier Inc. The authors examine the firm's core values and successful business strategies from its formation to the present day, as well as Montreal's rich financial business history from the mid-nineteenth century. The following book review will provide an overview of the book's major arguments and themes, and discuss the strengths and weaknesses of the book.

Ferrabee and Harrison begin with the introduction of the first of the MacDougalls to arrive in Montreal in 1840. Lorn MacDougall, born in Scotland, first established a brokerage business that traded flour and grain. His first venture was a failure, however, his partnership with John Glass, lasting from 1844 to 1849, as MacDougall & Glass, deemed to be successful as they were the first brokers to charter vessels and agents for British shipping companies. This was the beginning to Lorn MacDougall's status as the leader of the financial sector in Montreal. Signs of the MacDougall family business formed when "Lorn set up a partnership with his brother Leigh as general brokers, under the name of MacDougall Brothers, the first of many times that designation would appear." (20)

The second and third chapters describe Canada's period of prosperity during the 1850s and 1860s. For the newly established MacDougall Brothers, this decade was rewarding as it signified financial success and the evolution of the broker-merchant class. In fact, the brokerage business was evolving "to a new level of sophistication defined by a division between those selling commodities to those selling financial instruments". (44)

Moreover, for much of the 1960s, the MacDougall family began to diversify its businesses since Lorn and Leigh were set up in two different partnerships that covered a wide range of businesses, which provided knowledge and support to the two younger MacDougall brothers, Campbell and St Clair. Lorn became the first president of the Montreal Stock Exchange when it was formally founded in 1874, while the family firm, MacDougall Brothers, enjoyed good connections with the Bank of Montreal, which dominated Canada's banking scene at the time.

The next two chapters begin with the examination of the post-confederation boom and the depression that followed, lasting up until 1879, which targeted the stock exchange as its main cause. This period of time was significant to Canadian history as it marked the building of the Canadian Pacific Railway, which was executed to eventually combat the recession. The MacDougall clan continued to grow through the 1970s since St Clair and Campbell created a new MacDougall Brothers and sold stocks and bonds with and through the major stock exchanges, including the Toronto Stock Exchange, incorporated in 1878. 1876 proved to be a year that solidified the MacDougall's reputation as leaders of Montreal's financial community, since the Bell Telephone Company of Canada launched the telephone and Lorn, St Clair and Campbell won a major role in the first issue of Bell Canada's stock, worth $500,000.

Chapter six describes the years leading up to the twentieth century. After the death of Lorn in 1885, St Clair became president of the Montreal Stock Exchange, which retained its position as the leading exchange in the country. The association with the MSE was good for business at MacDougall Brothers and the exchange's reputation and further enabled the MacDougall family to build strong ties in the financial community. Likewise, the Canadian capital market started to develop and technology played a key role in increasing global competition as communication had improved relations between the London and New York stock exchanges.

The next chapter discusses the twentieth century and the effects of World War One. The image of a broker continued to many, to be nothing less than a gambling den since regulations were not yet placed in the industry. The MacDougall's were aware of this reputation and "...from the beginning, Lorn had made sure that the Board of Trade provided an umbrella to oversee the business". (104) During the First World War, the MacDougall family business was slow due to a decree by the MSE shortly after war broke out that virtually closed down the exchange. The war also transformed public perceptions of the financial world and brought in a much wider group of Canadians to investing.

Chapter eight and nine analyze the boom and bust occurring in the 1920s and 1930s and the Second World War occurring afterwards. During the "Roaring '20s", the stock market was rising and there was a resource boom in commodities. In 1921, Hartland MacDougall started the MacDougall & MacDougall partnership with his old friend Robert E. MacDougall, which took over MacDougall Brothers. The major event of the 1920s, which started the Great Depression, was "Black Tuesday", the devastating stock market crash which occurred on October 29, 1929. This event had negatively affected the MacDougall family and brought financial instability, which was later overcome by assistance from business friends. During the war, the stock market experienced ups and downs and it wasn't until the mid-1940s that the volume of the MSE and profits of Mac & Mac began to climb. Industrialization was increasingly visible during this time with the production of steal, oil, gas and nuclear energy at high levels. Due to its fast pace in industrial and population growth, by 1948, "it was part of a long-term trend that saw Toronto replace Montreal as Canada's financial capital". (137)

The tenth chapter explores the 1960s, which were very important years for the MacDougalls. In 1960, MacDougall & MacDougall merged their business with MacTier & Company and was named the "3 Macs". This merger, creating an incorporated company and combined both a bond house and stock brokerage firm, created a larger source of revenue. Additionally, in Montreal, BMO established a contract with the 3 Macs due to the growing investment opportunities and requirement for financial advice. The business of the 3 Macs now fell into the category of wealth management, combining both investment advice and personal service, such as tax preparation,