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a number of minor lawsuits."4 5These unanticipated ex penses combined with the increased capitalization to keep dividends lower throughout the second cycle than they might otherwise have been. These continued returns to the investors were achieved despite an economic base that was becoming increasingly constricted. There was little news now of the immigrant trade, and after 1869 even the troop contracts were valueless. 4 6 Instead the Canadian Navigation Company relied on two principal sources of income. For a highly con centrated season of from ten to twelve weeks, pleasure travel was at its height. The Saguenay and the old American boats were run and the Royal Mail Line vessels were crowded. During the balance of the season the first two lines were laid up while the Mail Line boats concen trated on competing with the Grand Trunk and the for warding lines for the package freight trade. Enough was offered every season to compensate the mail boats for their extra expenses. 4 7 The experience of the Canadian Navigation Company clearly demonstrated that given substantially the same vessels, the Royal Mail and its subsidiary lines could pro vide a reasonable rate of return despite opposition from the Grand Trunk. To emphasize this point the largest dividends paid by the company were for those years when John Hamilton was still an active participant in the management of the line. Linder the circumstances it can scarcely be argued that Hamilton was an inevitable vic tim of Grand Trunk Railway competition. W hen economic growth resumed in the early sixties, his line proved viable once more. AMALGAMATION Despite the generally profitable operations of the Cana dian Navigation Company, there was a move in 1874 to merge the firm with the Richelieu Company. Between 1869 and 1873 that enterprise had paid regular dividends of 15 percent annually while its stock the following spring was selling at 180 despite the depression. 4 8 Sir Hugh Allan's firm, with annual dividends of only 8 or 9 percent, seemed a poor cousin by comparison. The incentive for the amalgamation of the two firms may have been the belief that the Richelieu Company could pay well for the shares of its less fortunate associate. An alternative explanation, but one which does not necessarily exclude the first, is that Sir Hugh Allan was in tent on taking over the Richelieu Company. Several years later its corporate successor, Canada Steamship Lines, was subjected to a procedure very similar to what Sir Hugh may have had in mind - the reverse takeover. The key to this gambit is the sale of one company to a large one where the smaller firm's shareholders are paid in the stock of the new parent company. This block of shares is then used as a launching pad to seize control of the larger firm. Essential to the manoeuvre's success is that the larger firm not be controlled by a closed group of shareholders, and that the comparative sizes of the firms not be inordinately disproportionate. 4 9While in this instance both conditions held, another important factor was the willingness of both parties to amalgamate, This disposition would not be easily cultivated. The courtship was initiated in June of 1874 with Allan displaying that same insensitive touch which had secured an annual subsidy from the Richelieu Company in 1869. He wrote its board of directors informing them that he was on the verge of selling the two creaking veterans of the American line to a new opposition company recently formed to run betw een Montreal and Quebec. If, however, the Richelieu's directors agreed to merge with the Canadian Navigation Company before a specified hour the next day, he could cancel the sale. They emphatically refused to acquiesce to a `shotgun wedding.'5 0 Undaunted by this rebuff, Allan postponed the deadline and made a more concrete proposal: to evaluate the Cana dian Navigation Company stock at par and the Richelieu John Hamilton's Royal Mail Line Ontario Steamboat Company 1859 -1867 Canadian Navigation Company 1861 -1875 Richelieu Company 1845 -1875 (inc. 1857) 1867 1875 Other Shipping Concerns linked by investment: Hugh Allan: Montreal to Great Britain (Montreal Ocean. Steamship Company) Overton & Charles Gildersleeve: Bay of Quinte and Port H ope - Cobourg - Rochester routes Duncan Milloy: Toronto - Niagara route Richelieu and Ontario Navigation Company 1875 - 1913 11