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The Pacific scandal involves the allegations of bribes being taken by Canada's Conservative government of Sir John A. Macdonald. As part of British Columbia's agreement to join the Canadian Confederation, the government had agreed to build the Canadian Pacific Railway, a transcontinental railway linking the Pacific province to the eastern provinces.

Two groups competed for the contract to build the railway, Hugh Allan's Canadian Pacific Railway Company and the Inter-Ocean Railway Company. In 1873 it became known that 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 came to light showing receipts of money from Allan to Macdonald and some of his political colleagues. Perhaps even more damaging to Macdonald was when the Liberals discovered a telegram, through a former employee of Sir Hugh Allan. Macdonald had sent the telegram to Allan six days before the 1872 election which read, "I must have another $10,000. Will be the last time of calling. Do not fail me. Answer today." Macdonald resigned as Prime Minister. He offered his resignation as the head of the Conservative party, but it was not accepted and he was convinced to stay. 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, after which Alexander Mackenzie succeeded MacDonald as the new Prime Minister of Canada.

Despite the short-term defeat, the scandal was not a mortal wound to Macdonald, the Conservative Party, or the Canadian Pacific Railway. An economic depression gripped Canada after Macdonald left office, and Mackenzie was blamed for the ensuing hard times. Macdonald would return as prime minister in the 1878 election thanks to his National Policy, an office he would hold to his death, while the Canadian Pacific would be completed by 1885 with Macdonald still in office.

• Canada's first political scandal,CBC Video
• Manifest Destiny and Western Canada Part One
• Manifest Destiny etc Part Two - an alternative view of the Pacific Scandal and the overall binational political context at the time. Explores Sir John A.'s involvement with the CP's rival the Northern Pacific, which is usually obscured in Canadian histories, but in the context of the western rebellions and the politics of the railway barons and American expansionist designs on the northwestern quarter of the continent.

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