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~ ~ R.P. Rithet
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R.P. Rithet
and the Closure of the Columbia
Flouring Mill
In 1887, a
flour mill was established on the banks of the Spallumcheen (or Shuswap) River in Enderby
by George R. Lawes and G.H. Rashdale. The mill's source of wheat was the rich Spallumcheen
Valley.
In his report on the economic viability of a railroad into the Okanagan Valley, A.S. Farwell estimated that there were 325, 760 potential acres of agricultural land available for farming and that 3,500 acres were already producing wheat between Enderby and the head of Okanagan Lake.
In its first year of operation, the Columbia Flouring Mill turned out about 100 barrels a day. Before the completion of the Shuswap and Okanagan rail line, the product was transported to the CPR main line at Sicamous via the river. In winter, flour was hauled over the ice by sleighs. This journey could be a treacherous undertaking. Several years before the opening of the mill, Web Wright, later proprietor of the Enderby Hotel, lost a team pulling a heavily laden sleigh at the narrows in Sicamous. Clearly, transportation was major concern to the owners.
Their other problem was financing. The mill cost $60,00 -- not a small amount of money in 1887. They were initially bankrolled by the Bank of British Columbia, but when the bank withdrew its support they were forced into liquidation. By the fall of 1888, Victoria entrepreneur R.P. Rithet had controlling interest in the Columbia Flouring Mill.
"After R.P. Rithet took over the management, the mill was run to the general satisfaction of the farmers for some years, but gradually the farmers became convinced that they were not getting enough for their wheat considering the price of flour, and this feeling was brought to a climax in 1895 when the price of wheat was reduced the $16 per ton or 48 cents per bushel. A meeting was accordingly held at Armstrong for the purpose of organizing a company to build and operate a mill as a co-operative concern."
Thirteen years later, in 1908, Okanagan Flouring Mills Company was placed in liquidation. Attempts were subsequently made to revive the Armstrong milling firm under the management of Murdock MacKay of Salmon Arm, but the effort failed in the long run. In the meantime, the Columbia Flouring Mill in Enderby continued to ship flour and became a joint stock company with limited liability on 1 June 1903. "The capital stock was $100,00 divided into 1,000 shares of $100 each. The first shareholders were T.H. Lawson, F.V. Moffat (sic), R.P. Rithet, W.A. Lawson and R.J. Ker, all of Victoria except F.V. Moffat (sic), who is described as a travelling agent of Tacoma, Washington. The company ceased to do business and was struck off the Register of Joint Stock Companies on 31st May, 1923."
Why were the mills that had seemed so successful at the turn of the century struggling for existence in the following decade, and ultimately dying? In a 12 November 1928 letter to the Okanagan Historical Society, F.V. Moffet, manager of the Enderby mill from July 1903 until it closed, offered the explanation that with operations at Vernon, Armstrong and Enderby, the valley was over-supplied with gristmills: "...that the largest crop of wheat raised in the valley, while he was manager at Enderby, was 5,000 tons, and that the capacity of the three mills was 600 barrels per day of 24 hours. A little calculation, therefore, will show that the three mills were capable of grinding the entire crop in 64 days." Coupled with the emergence of prairie grain farms, it was only a matter of time before some or all of these mills in the north Okanagan closed.
The Enderby mill ceased production in early 1914. There was not a hint of a problem with overcapacity in the local newspaper, nor was there any public announcement as to why the mill had closed its doors. The Armstrong mill continues to operate.
A close examination of the correspondence between W.A. Lawson and R.P. Rithet from 1908 to 1915 answers the question of why the Enderby mill closed when it did. It had much more to do with the financial situation of R.P. Rithet and his empire than it had to do with the question of overcapacity.
If Messrs. Lawson, Lawson and Moffet were shareholders in the Columbia Flouring Mills, they were very minor ones. W. A. Lawson was Rithet's principal secretary and office manager of the former's vast commercial and financial empire. T.H. Lawson was also employed in the Rithet Victoria office as an accountant. As you will discover, Moffet borrowed from Rithet to finance his shares in the Enderby enterprise.
Rithet was not only involved with flour mills (Enderby and Vernon) and railroads (Shuswap and Okanagan), but he had a cannery on the Coast, a wharf in Victoria, office buildings, and real estate in Vancouver and near Victoria. He had retired to San Francisco by the turn of the century, and it was Lawson's job to keep him informed and keep the cash flowing. The latter was not an easy task as it turned out. "I enclose a letter just received from the Bank of Commerce. Gillespie is absent at present but the Assistant Mr. Foster read to me yesterday afternoon the letter they had from head office when I asked to put their views in writing to forward to you. I am surprised at the remarks they make about the Columbia Mill and the Grocery Accounts but they are just in line with the position they took about the Albion affairs -- pressing for realization no matter at what sacrifice. We have had no complaint from the Bank about our account for nearly a year when we were notified that it had to be kept on new lines by that no overdraft on current account would be allowed and that it should be kept within the authorized limit. It has exceeded it slightly at times but only for a few days."
After receiving a reply from Rithet, Lawson responded to the bank: "Mr. Rithet deals very fully with the points mentioned in your letter and complains that although our business has not been profitable for some years he has refrained from curtailing or making material changes on account of the many interests which are connected with it and also in the hope that conditions will change which will enable such a business as ours to be conducted on times approaching at least the Winnipeg comparison given in your letter."
Lawson then outlined for the bank's consideration numerous "...realizations now in progress..." meaning, of course, the sale of real assets. He gave a partial list: the Wellington Farm with a value of $42,700; 108 lots of the Esquimalt Road property (half owned by Rithet) listed at $63,000; plus an unspecified sale of additional properties at $59,000. He believed that the bank account would soon be in a more satisfactory position.
But Rithet had a $100,000 overdraft limit with the bank that by August 1910 was averaging $25,00 per month, but was sometimes as low as $17,500. If Lawson wasn't concerned, the bank was. By spring of the following year, Rithet was $25,000 over his limit.
Throughout this period, Lawson was also corresponding with Moffet in Enderby. There wasn't a hint of the tight financial situation that the parent company was experiencing. It was business as usual. In October 1908, Lawson wrote: "I sent a copy of the Mill accounts to Mr. Rithet. He remarks 'Sorry all the earnings are gone in repairs and improvements but hope some may show to the good this year.' He authorizes us to allow you the additional remuneration as before to go in payment of interest on your note and I have today written an official letter about it."
The Columbia Flouring Mill was experiencing its own cash flow problems. In November 1908, Harvey and Dobson, the mercantile store on Cliff Street just south of the flour mill, encountered serious problems and hadn't paid its bills. A scheme was devised to recover part of the money through debt restructuring, but all the creditors had to agree to it. Lawson gave permission to proceed, but "...I agree with you that it is very uncertain as to whether the business can be brought around and that until all the creditors agree to the arrangement proposed there is a certain amount of risk in furnishing supplies. After all have granted the extension new supplies have, of course, preference of payment."
A year later, Lawson wrote Moffet: "I have your letter of the 22nd (July) and am very pleased to hear you have made a good showing for last year. I have had an idea all along that the results would be fairly satisfactory and am in hopes now that the turning point has come that for the future good returns on the capital employed will be realized. I don't see how it can well be otherwise with your plant in first-class order and the ability and attention given to the management. I am sending a copy of your letter to Mr. Rithet who I am sure will be well satisfied but you need not be surprised if he insists on a dividend being paid out of your profits. I think myself we ought to pay 10%. That needs not be paid out in cash but simply brought to your debit with us and your share plied on your note. I am not to suggest this to Mr. Rithet but quite expected he will take this view."
As the cash flow problems of the Rithet empire continued, Lawson told the owner he had opened discussions with the Bank of Montreal which he thinks will offer fewer banks charges and a larger overdraft.
It was still business as usual at the flour mill. Lawson wrote in August to discuss such matters as businesses getting an extra 60 days on flour from Vancouver or problems with Columbia Flouring Mill's salesmen. "In this connection, I may mention that a customer of ours, J.J. Irving Co., Ashcroft, when here the other day said he had been very stiff with him about terms insisting, I understand him to say, that you would not sell to him without the cash first in hand. I have no doubt that if you adopted this course you had good reason for it. We give this man fairly large credit as we believe he is good although slow pay, but we take out payment for our supplies largely in Beans and (?) which he grows extensively. However, he seemed to think you were treating him rather harshly and I just mention it as I am writing to you anyway and to show how ready people are to take offence."
A few months later, Lawson reported to Rithet: "I found everything in order. The property being well kept up and in first class condition. The mill at present being well kept up and in first-class condition. The mill at present is running full time. The new wheat supply coming in well and of capital quality. The building of the dwelling house progressing favourably. This is much needed as the old house is not now fit to live in. I sent you a day or two ago a copy of the balance sheet and profit in account. As you would notice, his ranch shows badly caused largely by a heavy loss on a lot of sheep he brought, many of them dying during last winter. They are now all sold off and the operations are now limited to keeping hogs for the purpose of consuming mill waste which would otherwise be of no value. This property should be sold when opportunity offers."
The house referred to in the report was a two-storeyed brick Victorian masterpiece complete with hardwood floors and a ballroom. A significant dwelling in any town, but in Enderby it was a mansion. Certainly, it was appropriate for the manager of the oldest and primary industry in the in the community to have such a magnificent structure. It was located on mill property at approximately the corner of Belvedere and Regent streets.
In the spring of 1910, officials were looking into the legal implications of using the term "Wheatlers" for a breakfast food. It had been registered as a brand name by the Tilson Company. Lawson was willing to submit the proposal to the Rithet company lawyers, but in his musings he suggested that perhaps the Tilson Flouring Mill. Management was continuing to create new product lines to expand the market.
A month later, Lawson forwarded to Enderby a series of clippings from the Canadian Cereal & Milling Co. Rithet had the following to say about pursuing the possibility of interesting the larger milling company in the Enderby operation: "It has struck me that Mr. Moffet might ascertain whether they would care to deal with the Columbia Flouring Mills Co. in order to get them out of the way. I am only making a suggestion of this kind as I wish to leave it entirely to Moffet but it appears to me that in this business as in all others the small institutions will have to go to the wall sooner or later so I think it would be well to get under cover if we can do so upon anything like reasonable terms." Could this have been one of the first signals to Moffet that Rithet wanted out of the milling business?
While we don't have Moffet's letter, we do know the contents of Lawson's letter to Rithet: "I wrote to Moffet as suggested in your letter sending him the advertisements you enclosed and now hand you his reply as well as a supplementary line to myself from which you can notice he takes a hopeful view of the future and not anxious to dispose of the property. I think it would be well however for him to keep in mind that we are anxious to realize should a favourable opportunity offer."
Clearly, Moffet saw a future for the flour mill in Enderby, while Rithet and Lawson wanted out as soon as possible. In June, Lawson was even more explicit with his Enderby mill manager: "Mr. Rithet in acknowledging your letters about the Enderby property suggests that it would be well for you to keep an eye on the market with the view of having the Mill included in any large deal which may be handling other properties in the same direction. He still thinks that the larger properties will absorb the smaller ones and while we do not want to appear anxious to sell, he thinks if we get the proper price, it would be better for all of us to do so. When there is any bonafide business in sight we can go into the matter of prices and terms. This all put before you first as a suggestion."
How soon a suggestion would become an imperative was probably foremost in Moffet's mind. He had a young family and was well established in the community, but it appeared that the parent company was prepared to sell the mill. Perhaps he was beginning to sense the cash flow problems of the Rithet Company (April 20, 1911: $26,000 over the $100,000 overdraft limit) when he complained about shares in the company not being sent to him. Lawson replied that he had been just too busy lately, but would attend to it as soon as possible.
The year 1912 seemed uneventful, but it's obvious Lawson had been pressuring Moffet to sell the mill in Enderby. In a letter to Rithet, he wrote: "We have written Moffet again pointing out the necessity of realizing more speedily and asking for a statement showing the change since June."
By the spring of 1914, the Rithet Company had hit the wall. It had restructured its debt in 1912-13 in hopes of getting enough cash from sale of assets to cover the outstanding obligations. It was not successful. Lawson to Rithet: "Mr. Crawford, Canadian Bank of Commerce, reminded me yesterday of the arrangement made last year by which the balance of your loan was to be paid off last month. I am afraid we cannot well give them a cheque now and if you approve we might apply for an extension of time giving as an excuse the disappointment we have had with the monies due on the Broadmead purchase as with other collections, Esquimalt Road property etc. Our bank loan account stands at $103,000 with the Colonial Securities balance to be provided for as well as a possible demand from the Bank of Montreal on the account of the Columbia Mills, with other ordinary payments for Fraser, etc. Money keeps very tight...amounts are hard to collect. The enclosed is a sample of the response we get to our letters requesting payment of sums due."
In early 1914 the Columbia Flouring Mill ceased production. Moffet had been at the Coast, no doubt going over the final details of the closure and his future with head office. He reported to the local newspaper that he didn't know when the mill would begin production again.
Lawson wrote Rithet: "Moffet is to start a commission business in Flour and etc. and will occupy our Vancouver Premises for the present paying us $60 per month, but retaining storage accommodation for the staff we have on hand there. We only give him these premises from month to month. When business picks up we should get considerably more for them." Moffet went from managing a major western flour mill, to flour broker, paying Rithet rent in Vancouver. Such a turn of events seemed hardly the payout for a business partner, but more likely the outcome of a manager put to pasture.
The former manager was a frequent visitor to Enderby after the mill closure. He presented himself as managing the Columbia Flouring Mills in Vancouver and was in the area "...to buy Okanagan wheat at the highest price obtainable. The Moffet Flour Co. is the firm name of the new enterprise."
Whether or not Moffet knew the real reason for the closure of the Columbia Mill, he never let on. (Nor did his daughter, Esther, when I interviewed her in Seattle in 1979.) In fact, from the letter referred to earlier, he maintained that there was processing overcapacity for the wheat produced in the north Okanagan.
The locals were mystified at the mill shutdown, attributing it to the fact that farmers had been duped by eastern flour interests: "With flouring mills at Vernon, Armstrong and Enderby, the latter with everything in shape to operate at two week's or a month's notice, some 200 carloads of wheat have been shipped east this fall from the northern part of the Okanagan. The mill at Vernon has been dismantled several years; that at Armstrong is only partly in condition, but the mill at Enderby was, when it ceased grinding some three years ago, one of the most up-to-date 500-barrel mills in the Province, and its product - Moffet's Best - was as good as the best on this or any other market. Today this mill lies dead. It has not turned a wheel for three years, though much of the machinery was put in new only a short time before it ceased grinding. Afflicted with the fruit myth, the farmers and merchants of the Okanagan killed the bird that laid the golden egg. They fell to the special inducements and rebates offered by eastern flour manufacturers and killed the home institutions which were employing large numbers of men and at the same time offering a ready home market for the wheat grown here." One can only imagine the wrath of editor Henry Walker if he had been privy to the Lawson-Rithet correspondence.
Even after the closure, the Rithet Company's financial woes with the Columbia Flouring Mill were far from over. Lawson to Rithet: "We enclose copy of a letter received from the Enderby Manager of the Bank of Montreal regarding the indebtedness of the Columbia Flour Mill and our reply. It would seem that the local manager has instructions to keep nagging at us and we think it would be well if you could take the matter up with Mr. Sweeney letting him know that we quite realize that we are responsible for this debt and that we are anxious to reduce it and will do so from time to time, but that we cannot very well pay it all off and partial only as we find it impossible to realize it now..."
Later that month, Lawson told Rithet that they would try to reduce the overdraft of the Columbia Flouring Mill's account with the Bank of Montreal in Enderby by %5,000. That was the best they could do. He hoped Rithet had taken the matter up with Sweeny so that they would no longer have to endure the nasty letters from the Enderby Bank manager. He added: "There is no inquiry for the property and as it has been advertised in all the Milling papers we think it would be useless at present to make any special effort in that direction."
The economic direction of the Rithet Company seemed to be a continuous downward spiral. Obviously, in the heated economy of the first decade of the 20th century, Rithet had made numerous investments (some with partners) that had by the second decade become serious liabilities. "...these shares in the Colwood Land Company have been paid for and there is no use asking Sayward or anyone else to take them over at cost. No one appears to have any money for such investments at the present time... The Captain seems to be pretty hard up. He comes in periodically to see if there is any money coming in from Esquimalt Road sales but not a cent can be collected just now and I am afraid a lot of it will come back on your hands."
Even when the economic picture appeared bleak, Lawson continued to do his best and assured Rithet, "We are keeping a close watch on the credit and keeping down expenses to the lowest point possible." Their bank overdraft had been bumped up to $125,000, but they found themselves over that amount by $24,500 in December 1914. A desperate Lawson declared: "We cannot keep the business going and pay off the liabilities as well."
One of those liabilities was the Columbia Flouring Mill's $70,000 debt at the Bank of Montreal in Enderby. Lawson suggested that Rithet personally intervene with senior management at the Bank of Montreal and especially with Sweeney. "I enclose a draft of a letter we propose to write to him. Please look it over and make any suggestions you may think advisable. While we send this draft for your consideration would suggest that a personal letter from you would have much more effect and if you decide to take it up with him please destroy our letter."
Either Rithet delayed writing his letter or it had no effect, because by January 1915 the acting superintendent of the Bank of Montreal in Vancouver had written a nasty letter asking for some definite action on the outstanding account. "This is a very perceptory (sic) demand and calls I think for some very definite reply," Lawson told Rithet.
It became very clear that the bank wasn't interested in the property as a substantial debt payment; it wanted something more liquid. Lawson catalogued what options Rithet might have. Unfortunately for Rithet, his shares in the "Cattle Company of the Western Canadian Flour Mills" were already held by the Bank of Commerce. Did he wish to pledge shares belonging to the Proprietary Company (the main Rithet holding company)? Lawson thought not for two reasons: (1) that the company had not taken on the debt directly, and (2) it was obvious from previous correspondence that Rithet did not wish to alienate any more of these shares. In the end, Lawson thought that the Wharf Shares in the Victoria Scaling Company valued at $40,000 might be acceptable to the bank. He was hoping that the bank would be willing to write down about half the debt.
In the end, it was the Bank of Commerce that was willing to once again come to the rescue of the Rithet empire and pay off the Columbia Flouring Mill debt.
So ended the saga of the R.P. Rithet Company's involvement with the Columbia Flouring Mill in Enderby. More than a crisis in flour milling in the Okanagan Valley, the closure of the Enderby mill was a result of the Rithet financial difficulties played out on the larger stage of the province and the world.
Sources:
Report of Government Engineer Farwell, Victoria, B.C., 9 June 1887. Public Archives of Canada, R.G. 12, Vol. 1867, F. 3268-44.
Donald Graham, "The Rise and Fall of Grist Milling in the Okanagan Valley", 4th Report of the Okanagan Historical Society, pp 12-15.
Frederick H. Barnes, "Early Days at Enderby," 6th Report of the Okanagan Historical Society, pp. 204-207
Correspondence between R.P. Rithet and W.A. Lawson, British Columbia Archives, Mss. 504, Vol. 3.
Enderby Commoner, 1909-1915
Robert Cowan
Okanagan Historical Society Report 1996