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 Confederation of Canada, the government had agreed to build the Canadian Pacific Railway, a transcontinental railway linking the Pacific provinces to the eastern provinces.
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, during which Alexander Mackenzie was elected as the new Prime Minister.