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The 1872 election was a hard fought affairs which revolved around the issues of Louis Riel's escape from authorities, the Fenian raids and the Washington Treaty. Macdoanld was viewed to have handled both poorly but he had expanded the country to the Pacific and Arctic Oceans. The loss of support that the Liberal-Conservatives (the name of Macdonald's part until the Liberal was dropped) experienced in Ontario and Quebec was somewhat made up for by support in the two new provinces of Manitoba and British Columbia.

Support in Ontario and Quebec might have eroded even further, perhaps to the point where Macdonald might have lost his majority, if not for a cash infusion of about 3.5 million in Quebec and 1.2 million in Ontario. The question which arose after the election was where that money had come from.

There were two companies competing for the contract to build the new transcontinental railway to British Columbia. One of the companies was led by David Lewis Macpherson's Inter-Oceanic Railway Company which may have had connections with George McMullen of the American Northern Pacific Railway Company. Neither Canadians nor Macdonald would let an American Company be involved in the building of the Canadian Railway so they and their partners were excluded very quickly form the competition. Sir Hugh Allan a influential businessman and supporter of Macdonald, led the consortium that was the granted the Charter to from a company to build the railway. The Government would not pay directly for the building of the railway but would vote a $30 million subsidy, issues large land grants worth another $20 million and support for the company in forms of tax exclusions and preferential treatment. Allan was tapped as the source of cash for the funding of the Conservative's election campaign and in April of 1873 L.S. Huntington, a Liberal MP from Quebec rose in the House of Commons and accused the Conservatives of taking $325,000 from Allan for the election campaign.

Macdonald claimed that the money was merely campaign contributions and nothing irregular had been done but, the cat was out of the bag and as more and more evidence of the activities emerged and the expanded scale of the relationship became clearer, a reaction of outrage spread across the country and in the House of Commons. When it was revealed that some of the money may have come from McMullen and the Northern Pacific Railway Company, all  hell broke loose and general opinion abandoned Macdonald. Macdonald was forced into a corner and in the House claimed

....I have fought the battle of Confederation, the battle of the union, the battle of the Dominion of Canada, I throw myself upon this house; I through myself upon this country; I through myself upon posterity, and I believe that I know that, not withstanding the many failings in my life, I shall have the voice of this country and this House rallying round me. And, sir if I am mistaken in that, I can confidently appeal to a higher court - to  the court of my conscience, and to the court of posterity. I leave it with this House with every confidence...I know, and it is no vain boast for me to say so, for even my enemies will admit  that I am no boaster - that there does not exist in Canada a man who has given more of his time, more of his heart, more of his wealth, or more of his intellect and power, such as they may be, for the good of this Dominion of Canada.

Sir John A. Macdonald to the House of Commons - November 3rd, 1873

Macdonald was mistaken in his estimate of support from country and party and as a vote was being prepared for a censure of Macdonald, he decided to resign. The result was that the Governor General, Lord Dufferin asked Alexander Mackenzie and the Liberal Party to form a government.