Two groups competed for the charter to build the railway, [Hugh Allan]?'s Canadian Pacific Railway Company and the Inter-Ocean Railway Company. In 1873 it became known that Hugh Allan had contributed a large sum of money to the Conservative government's re-election campaign of 1872. The Liberal party, at this time the opposition party in parliament, accused the Conservatives of having made a tacit agreement to give the contract to Hugh Allan in exchange for money.
Despite Macdonald's claims that he was innocent, evidence was found showing receipts of money from Allan to Macdonald and some of his political colleagues. Macdonald resigned as Prime Minister. He offered his resignation as the head of the Conservative party, but it was not accepted and he was talked into staying on. Perhaps as a direct result of this scandal the Conservative party fell in the eyes of the public and was relegated to being the official opposition in the federal election of 1874. Later the Liberals came back to power and had majority win in the next Mackenzie In 1873 he was given a far more effective weapon. The Pacific Railway scandal came to light just after the election. The Liberals had already discovered that the Canadian company that was building the railway was associated with United States railroad interests. They found that Sir Hugh Allan, the company's promoter, had financed the Conservative election campaign in return for the rights to build the line. After seven days of debate Macdonald resigned.
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