In Search of a Crime

• Author: C. Ian Kyer
• Pages: 41-73

41

three

In Search of a Crime

I   understanding of the bond market and the f‌inancial

services industry contributed to the Smith/Jarvis convictions,

it was politics that led to the trial. The charges against Smith,

Jarvis, and others and the trial that followed had their origins in the

political campaign of 1923. In the early summer, four parties fought

the election, but two are crucial to an understanding of the trial. The

Drury-led United Farmers of Ontario (UFO) had been the govern-

ment in power for the last four years, but the Conservatives had been

in oce for the fourteen years before that. Howard Ferguson and

his Conservatives were anxious to return to power and sought to

convince the electorate that the members of the Drury government,

rather than being the morally superior “uplifters” they claimed to be,1

were actually incompetent and corrupt.

When Drury’s minority government fell and an election was

called, Ferguson escalated his attacks. He would later share his elec-

tion strategy with a colleague: “The public has no intelligence. No

election was ever won by logic or arguments. Educated, intelligent

people . . . are in a hopeless minority. . . . The mob rules. The prob-

lem is to capture the attention of the mob.”2 He captured that atten-

tion by stressing that the Drury government, instead of being the

saviour of the Ontario farmers and the bringer of a clean and honest

The OnTariO BOnd Scandal Of 1924 re-examined

42

government, had been a hopeless failure with a record of poor deci-

sions, incompetent management, and corrupt practices.3 One UFO

practice that the Conservatives pointed to was the way that the Treas-

ury Department had changed how the government books were kept.

The suggestion was that the UFO government had made the change

to falsify its f‌inancial record and hide its incompetence and corrup-

tion. Conservative candidate W.F. Nickle said, “[I]f this Utopian party,

elected on the principles of political purity, had commenced so early

to falsify the books in so outrageous a manner, there was perhaps

more to be learned.”4 Peter Smith defended his record, saying that

Nickle was one of those brought out by the Conservatives to prove

that “black is white.”5 He added, “I am willing, and I challenge my

critics to submit my accounts to any responsible f‌irm of auditors in

Toronto, and if they say I’ve falsif‌ied my accounts in any way, I’m

willing to go to jail.”6

Despite Smith’s assertions, Ferguson’s strategy worked well, and

when the votes were counted, Ferguson and the Conservatives had

won a decisive victory. They won an additional f‌ifty seats, bringing

their total to seventy-f‌ive. Drury and the UFO lost many seats, leav-

ing them with only twenty-one members in the Legislative Assembly.

Drury himself lost his seat.

Shortly after winning the election, Ferguson set out to prove his

allegations of incompetence and corruption. He again turned to his

f‌ixer, Billy Price, who promptly took steps to investigate the f‌inancial

record of the Drury government. That investigation would culminate

in a series of dubious trials, of which the Smith/Jarvis trial would be

the most contentious.

Supporting the view that his actions were at least in part motiv-

ated by revenge, Ferguson’s government also took aim at Justice

Latchford, who had served on the Timber Commission. The Drury

government had created a second division of the Court of Appeal,

and Latchford had been made chief justice of that division. Not long

after assuming oce, Ferguson’s government sought to undo this.

They put forward an amendment to the Judicature Act7 that would

have allowed the provincial government to decide which federally

appointed judges would serve as trial and appellate judges and who

In Search of a Crime

43

would serve as chief justice. It would also have done away with the

Second Division of the Court of Appeal and thus deprived Latchford

of his position as chief justice of that division. Despite severe criti-

cism from former attorney general Raney that the amendment was

payback for Latchford’s role on the Timber Commission8 and notice

from the federal government that they considered the legislation

unconstitutional, the Act was passed.9 It was referred to the Ontario

Court of Appeal to determine its constitutionality. Norman Tilley, KC,

and James McGregor Young, KC, were appointed by the Ferguson gov-

ernment to argue in favour of its constitutionality, and Newton W.

Rowell, KC, and Hartley Dewart, KC, were appointed by the court to

present the opposite view. The majority of the appellate court found

the Act to be unconstitutional.10 Although the province had jurisdic-

tion over the administration of justice, the appointment of judges

was a federal responsibility. In seeking to decide where the federally

appointed judges should sit and who would be chief justice, the court

found that the province was inappropriately assuming part of that

federal power of appointment. The province appealed to the Privy

Council, but that body adopted the reasoning of the Ontario court and

found the Act to be beyond the powers of the provincial government

and of no ef‌fect.11

Meanwhile, Aemilius Jarvis was making news of a very dif‌ferent

sort. He was carrying out an ambitious yachting venture. Yachts and

yacht racing had long been his passion. As the Toronto Star said, “any

picture of Aemilius Jarvis without a yachting cap was unusual.”12 His

oce at his brokerage f‌irm also evidenced this passion:

[It is] lined all around with full and half models [of ships]. . . . Where

there were no models there are photographs of yachts — yachts

by the wind, yachts running free, yachts at anchor, yachts in stays.

Where there were no photographs there were blueprints and where

there were no blueprints there were oil paintings.13

Jarvis had demonstrated both a strong interest in and an aptitude

for sailing early in his life.14 As an adult, he had become Canada’s fore-

most yachtsman and a noted yacht designer. He had won more than

300 freshwater races, including the inaugural Canada’s Cup challenge