Economic history of Canada
The economic history of Canada is linked on the one hand to the colonial history of Great Britain and France , on the other hand to the British Empire and its southern neighbor, the USA . While the fur trade and the long-distance trade contacts of the Indians ( First Nations ) initially shaped the economic interests of the mercantilist states of Europe and the trading companies they founded, the Kingdom of Great Britain, after the ousting of France ( Treaty of Paris ), was prompted by the expansion force of the USA to To secure Canada militarily, to settle it more heavily, to develop transport links and to provide it with sufficient capital .
This strong political influence provided for canals and roads, for the recruitment of settlers, later for the construction of industries and railway lines , but also for the establishment of reserves for the indigenous people , who in many places stood in the way of the settlement and mining interests of the raw material companies. However, the development of a unified political and economic greater area was offset by historical differences between the provinces and territories , which continue to this day. Social and economic models, such as the strong and tenacious remnants of feudal society , played a significant role. Provinces such as Québec and British Columbia , which joined Canada in a phase that seemed to be economically favorable for them, tried several times to break away from Canada. The Francophones strived for independence, while the English-speaking areas tended to join the United States.
With the decline of the British world power, despite the aftermath of the Canadian constitution up to the formal separation of Canada and accelerated by the global economic crisis , there was a strong shift in economic focus to the USA. But this did also uneven, because the West is particularly directed to California and since the end of the 20th century increasingly on Asia from the prairie provinces , especially Alberta , first to the southern neighbor, then as oil and wheat supplier to the global economy , the metropolitan area around Toronto to New York and the surrounding metropolises , the east, especially Montreal and the Atlantic provinces , to New England and Europe .
Contrasting requirements
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When the first Europeans came to North America around 1500 , they encountered societies that had few goods and practically no adequate labor to offer for the early capitalist market and the needs of the feudal upper classes . Trade goods were poorly diversified and slavery was not a profitable business. In contrast to Latin America , gold was also found late . So there was little to be said for a conquest or even a settlement.
For their part, the inhabitants of the coast quickly recognized which goods the visitors were interested in. It was mostly furs. In return, they received barter goods made of glass and metal from the newcomers, but also weapons, which were rare, sought-after and of correspondingly high exchange value in their residential areas . Since many lived in poor settlements or as nomads , they often moved near the landing sites and the later trading posts in order to take the trade with the hinterland into their hands. The catchment area of the exchange sites became much larger than the Europeans first suspected, and it changed the local balance of power. Large areas were created whose exchange of goods was dominated by favored and assertive groups and whose leaders were often able to strengthen their prominent position as a result. On the other hand, the first epidemics decimated those tribes of the east coast that had the closest contact with the Europeans.
The mercantilism , of all economic activity so hosted that as much capacity in the respective territory remained, furs made into a major product for the European market. For example, after 1600, settlements were built for the first time to make economic use of the areas claimed primarily by France and England , but also by the Netherlands , Sweden and Spain . At the same time, the more frequent contact between the natives and the Europeans caused catastrophic slumps in the population due to diseases that were introduced. This depopulation, which varies greatly from region to region and is difficult to measure - through epidemics, migrations and wars against competitors - probably thinned out the trade network considerably. Persistent wars also damaged long-distance trade, including traditional trade.
The European colonies could not only live from trade in the long run, but also had to support themselves. After the Indians had helped them through the first winters, the settlers used a form of farming that was organized in Europe according to feudal principles. Land was given to a noble gentleman, who in turn lent it on in return for taxes and services.
French agriculture was at Frondienste bound (corvées), these services have been progressively replaced by taxes. In addition, these taxes were not suitable to encourage the serfs to higher yields. On the other hand , if the taxes were delivered in the form of coins, then inflation gradually ate up the Lord's income, albeit more slowly than it is today.
The transfer of feudalism to North America brought about a social conflict between French and English territories in later Canada , for England had decisively weakened the feudal regime as a result of the Glorious Revolution of 1688. In the New England colonies, feudalism was formally abolished in 1776, property became individualized, freedom of movement extended to those who were not slaves , duties and services disappeared, and work increasingly became a commodity . In the French territories, however, feudalism was not abolished until 1854. Until then, unfree work dominated in the country, slower economic development, a feudal hierarchy with strong dependency on a few families, who in turn saw their center in France.
France tried to curb the import of luxury goods in order to reduce the outflow of precious metals . In addition, it promoted the development of new technologies, protected domestic industries, regulated trade processes and controlled quality standards. The American goods were not allowed to compete with their own. From 1627 onwards , Richelieu supported the establishment of a trading company that would promote colonization and trade in furs, which did not exist in France. There were also fish and whale products. He also made sure that the feudal system, the Coutume de Paris , was introduced in the New World . The company surrendered its monopoly of fur trading to the colony of New France for 1,000 beaver pelts a year . Only French ships carried the North American raw products to France.
The theory of mercantilism also prevailed in England. But from the end of the 17th century the regulations neither went as far as in France, nor did they come from the court. At the same time, the factories were much less involved in the financing of the state budget, but rather developed according to capitalist principles. While monopoly trading companies profited from the trade in fish, tobacco , indigo , rice , wood , grain , cotton and, above all, fur, the soil fed the small local population. The agricultural yields were only rarely used for export , and the two branches were even more rarely used for mutual financing.
Both New England and Nova Scotia were initially dominated by the system of Crown Grants adopted by England, i.e. the crown and quit rents , the associated cash payments.
When the French colony became British shortly before the French Revolution , Great Britain relied on the region's solidarity against the United States. As a result, London left the social system largely untouched, and so both the French and American revolutions passed New France by.
After 1783, the often unregulated appropriation of land ( squatting ) ensured that land could be sold. On this basis, i.e. no longer according to feudal principles, land was given out to settlers on a massive scale from 1870, which in Canada did not end until around 1930. In addition, there was the issue of land to loyalists , i.e. refugees from the USA who remained loyal to Great Britain and to other veterans . These often sold their land, resulting in huge accumulations of goods that also gave the owners political power. The constitution of the province of Ontario consequently no longer mentions quit rents; on the contrary, it insists on free land allocation.
First phase of colonization: trade
Atlantic coast
Nova Scotia, which the British called Nova Scotia , was called the Acadie in French times . The Annapolis Valley was passed out as manorial rule , but this ended after a few decades and led to free land ownership. The cause was the war between the Huguenot Charles de Saint-Étienne de la Tour , the governor of Acadia between 1631 and 1642 and from 1653 to 1657, and the Catholic Charles de Menou d'Aulnay . While La Tour had been in the fur trade since 1610, lived among the Mi'kmaq , married an Abenaki woman and was supported by the merchants, there were people at court behind d'Aulnay. This conflict, which lasted from 1640 to 1645, in which the Protestant English played an important role, left the destroyed land free to use - despite the principle of “ nulle terre sans seigneur ” (no land without a feudal lord). When the Acadie became British in 1713 and the approximately 10,000 French there submitted, contact with the French feudal system was finally lost. The Acadians displaced in 1755 - other than those who persevered on Prince Edward Island and the upper Saint John River - returned from 1765 and were given land based on the more moderate British feudal system. The usual land size was 100 acres per head of family and 50 more per family member.
The colonial administration faced a fundamental problem, namely the financing of the development, security and administration of the colonies. In 1790 she wanted to sell the land for one US dollar an acre , but for the next few years the squatters dominated the country. In 1807 she tried to use the quit rent system to finance the colony , but the farmers were unable to pay this tax. Although there were successes in neighboring New Brunswick in 1832 , the timber industry got in the way, which was not interested in small-scale land awards. In 1835, the colonial power of Nova Scotia and New Brunswick urged the purchase of quit rents for 1,500 and 1,000 pounds respectively . In fact, from 1848 onwards, Great Britain only paid defense costs. The colonies were now financed by taxes on the settlement and by customs duties.
Prince Edward Island was a special case in that land was granted by the Crown. To this end, 67 lots were set up , which were called that because they were distributed in a kind of lottery. The owners had to pay quit rents between 2 and 6 shillings , but only Protestants were admitted. Therefore, as a condition of joining Canada in 1873, the island required Ottawa to provide a loan to buy land. Only then did feudalism end on the island.
The Newfoundland colony took a different route. Agriculture was almost impossible here, and the island largely relied on fishing and whaling. The fishermen tried to prevent settlers from entering their enclosure and requested their return to England around 1665. In 1675 there were around 1,600 settlers on the Avalon Peninsula , but no land claim was made, except for the areas designated for drying caught fish.
New France, Upper Canada
The first colonization efforts came from Richelieu's Compagnie de la Nouvelle France , whereby the company became the master of all land in North America that was under France, and at the same time had a trade monopoly. She gave one of the first fiefs in 1634 to Robert Giffard de Moncel near Québec . The Lord's job was to open up the land, living in the country himself. At the same time, he had the right to the flour mills and other facilities, with the corresponding taxes of a fourteenth ( banalité ). As a kind of compulsory service, he carried out the construction of bridges and roads towards the king, and he was responsible for the lower courts , from which he drew income.
The Coutume de Paris was officially introduced in 1640. From 1763 to 1774 it was no longer enforceable, but the Quebec Act re-established it. The new, now British seigneurs , increased the taxes. Except in the Loyalist area, the system survived until 1854. The British colony was thus economically divided in two.
With the Quebec Act, the British also stopped the free donation of unused land, for example to squatters . Instead, the vast area was gradually mapped and divided into lots . The sale took place in public auctions. The minimum price was 6 ounces per acre , plus 4 shillings quit rent per year and administrative taxes.
The first lieutenant governor of Upper Canada , John Graves Simcoe , pursued the establishment of an aristocratic system, but at the same time preferred the settlement methods of New England. In 1792 and 1793, 32 townships were sold to speculators, but apart from a small part they had to sublet these large areas. However, numerous small property units attracted financially strong buyers and in 1797 the corruption-prone system was replaced by public auctions. The Indians , especially those who had fled the United States as British allies such as the Mohawk , sold parts of their land.
In 1791, Secretary of State Henry Dundas gave instructions to provide land for the crown and for the upkeep of the clergy : two-seventh of the land reserved for settlers. This enabled London to avoid the settlers' participation in the administrative costs, which was not an end in itself. The experiences with the USA had taught London that such income quickly led to demands for participation. As early as 1820, the Crown reserve began to be sold in order to gain settlement sites , and the Church of England , which had received the so-called Clergy Reserves , also began to sell them. Overall, it was hoped that settlement costs could be neutralized by taking out loans to finance them in order to ultimately make a profit on land sales. Landless people should be used for public works, such as building roads and canals.
In addition, many places in Toronto, for example, resorted to road tolls or tolls to finance road construction.
Colonel Thomas Talbot's settlements on the shores of Lake Erie and those of the Canada Company in the Huron Tract to the northwest showed that land purchases from Indians and land grants to veterans free from feudal tax systems were often more successful. Talbot had received 5,000 acres as a former military man . By 1831 he had given land to 40,000 people in 28 townships and an area of 500,000 acres . The Canada Company also benefited from immigration from Great Britain. As early as 1840, the company had repaid 250,000 of the 320,000 pounds it had borrowed. The rest was waived. Under the contract of 1826, the company was allowed to invest £ 43,380 in public works and infrastructure in the Huron Tract . This also included the expansion of shipping traffic on the Great Lakes .
In 1862 the United States opted for the “free land” and the “right of the conqueror” option. The free allocation of land that one wanted to take over from the USA, however, threatened the settlement and way of life established by the Métis in Manitoba . Here the railroad lines and the vast possessions of the Hudson's Bay Company were open to speculation. Since the value of the always the same size pieces of land diverged very strongly, inside information was of inestimable value. Just to prevent land speculation , one had to intervene in a normative manner. The simple cultivation methods of the time meant that a settler family could cultivate 100 to 300 acres .
Since Canada was very much dominated by agriculture in this phase, the fact of the different developments in the provinces was of great importance.
Second phase: settlement
Newfoundland
English fishing had increased between 1500 and 1585, but Iberian fishermen predominated. In the beginning one also traded with the Indians, mainly to get furs.
In 1583 the London and Bristol Company offered the Crown to settle and mine iron ore. But George Calvert , leader of the colony near Ferryland in the east of the Avalon Peninsula, came under “suspicion of papism”. This colony with around 100 inhabitants was founded in 1621. But it failed because of the climate and French attacks. Calvert was only successful in Maryland . In Ferryland it was David Kirke who set the tone, which was not suspicious. But in 1634 the settlement permit was revoked under the influence of the fishermen. The local Beothuk were drawn into the brutal war between fishermen and settlers and were exterminated in the process.
At first the first arriving captain of the season prepared the drying rods on the bank, but in the 17th century this was done by a Commodore from the English fleet. This office became a kind of governor's rule. A triangular trade developed between New England, which delivered grain, wood, meat and fish to southern Europe, and from where wine and fruit, cloth and silk, spices and cheese went to England. From there, English goods went to Newfoundland. This not only tied trade to extensive commodity cycles, but also separated trade and fishing. The large cargo ships were unsuitable for fishing. Seasonal fishing was increasingly being replaced by local fishing, which benefited the settlements. In 1699, the Newfoundland Act allowed settlers to fish.
During the War of the Spanish Succession, the French overran the settlements in 1696 and 1705. With the Treaty of Utrecht in 1713 and with the end of the Seven Years' War in 1763, the island finally came to Great Britain. Still, the fish trade with England became insignificant compared to that with New England, which in turn supplied Newfoundland with grain. In 1716 only a third of the fishing was carried out by settlers, in 1764 it was already two thirds, by 1800 over 90%. The marketing was done by New Englanders. Especially fish was exported from Newfoundland to Europe, New England, the West Indies . Until it joined Canada in 1949, economic ties with the hinterland were very weak. In contrast, the ties to the British Empire , in whose interests intra-imperial trade lay, were very strong.
Until around 1790, the fishermen of Europe regularly moved offshore without staying in the country. French ships caught in the entire area between Newfoundland, the Strait of Belle Isle to Nova Scotia. Important centers were on the coasts and on the Gaspé Peninsula . The Portuguese fished mainly off southeast Newfoundland, the English around the Avalon Peninsula and in the waters of New England. In 1713 the French competition largely ended, while English and New England fishermen fought each other.
American independence initially gave the fishing industry a strong impetus - even if the first time was catastrophic - because England was now dependent on Newfoundland. Apart from a crisis around 1815 to 1830, the fish export prospered, which was joined by an expanding shipbuilding industry. At the same time, the Napoleonic Wars and the war against the United States from 1812 to 1814 finally ended the Europeans' seasonal fishing. The fishing and shipbuilding industries were increasingly concentrated around St. John's .
Between 1785 and 1815, the island's population quadrupled from around 10,000 to 40,000. In 1824 the island received the status of a colony with a governor, and in 1832 a representation. However, compared to other regions, the economy continued to decline. Fluctuations in market prices made people extremely vulnerable, raw materials became increasingly cheaper, and after 1900 Newfoundland even lost its independence.
New France
The French settlers took over certain techniques from the Indians, such as the canoe, or learned how to avoid scurvy , but unlike the British they did not plant agricultural products such as corn , beans , pumpkins or tobacco . Only a few French stayed in the colony during the first phase of settlement from 1608 to 1641; In 1641 there were only 240. In 1642, under ecclesiastical aegis, a second phase began, which led to the settlement of the Île de Montréal . In 1663 only 10 of the 70 seigneuries had managed to establish a significant settlement; most of the French lived around Québec and Montréal. The number of settlements grew slowly along the rivers, as cities can only be Québec, later Trois-Rivières and Montreal. The Laval University was founded in 1635, one year before Harvard.
In 1663, state funding began through a representative of the king, the artistic director Jean Talon . Now around 500 newcomers came every year, plus around 1000 unmarried women from France between 1663 and 1672. In 1668 around 2,000 soldiers came with the Carignan-Salières regiment , of whom over 500 stayed. Paris guaranteed constant prices for three decades from 1677, at which furs were bought in Canada. These prices were independent of the falling world market prices.
After 1700 the development was increasingly overshadowed by the conflict with Great Britain. Only 4,000 new settlers were added. After all, the population increased from 24,500 in 1720 to 1760 to 70,000 due to numerous children born in the colony. In 1704, the mercantilist Paris forbade the production of fur hats in the colony, and in 1736 also that of fabrics.
The aristocratic estates were initially very modest, even if they called themselves "Seigneurs". But they had the advantage that they were guaranteed income from the colonial government and the trade monopolies. Since the pensions could not be befitting and the nobles often had to cultivate the field themselves, domains were of great importance for supply. Work obligation and compulsory labor existed side by side. With the increase in tenants at the expense of forced labor, the importance of goods decreased in the 18th century. In addition, the serfs were not as strictly tied to the clod as in France, because they wanted to encourage immigration. Therefore, the crown tried to protect the serfs from attacks by the noble intermediate court.
The plowing with the wheel plow was done by oxen, the harrow by horses. The harvest was done with the help of a sickle , the scythe was more likely to be used for haying. Most of the time, the harvest was enough for personal use. Agriculture remained the basis of the colony, but played only a minor role in foreign trade. As a result, the shipbuilding industry in particular, with its high demand for wood, set changes in motion.
All trading activity was concentrated in Québec, Trois-Rivières and Montréal. Profits flowed into France and little capital remained in the colony. The need for imported goods was low and related to luxury goods such as soap, fabrics, elegant clothes and shoes, but also lamp oil and salt. Exports got going from around 1720, when higher prices made even grain exports worthwhile. These went to Louisbourg or the West Indies , for example .
Montreal consisted of two streets around 1700 with numerous cross streets, on which 1,300 people lived in fewer than 200 houses. Almost 3,000 people lived there in 1731, and in 1741 even 3,575 in 457 houses. Québec had 5000 inhabitants at that time. Only these centers were connected by roads, with the Chemin du Roy not being built until 1731-1737. The road construction, which soon connected the forts, was related to the growing number of riding horses. Otherwise river navigation and canoeing dominated. These were mostly led by young men who hired themselves as rowers.
Since only a few had money income and they often bought their goods in France, there was no functioning money cycle. When in 1685 a British ship hijacked the ship with the pay payments, the provincial government issued playing cards as money. This procedure soon became permanent, but when too many playing cards came into circulation during the War of the Spanish Succession , their value was halved. Nevertheless, there was confidence that the cards would remain redeemable. When French colonial rule disappeared in 1763 and the British did not accept the cards, the capital market collapsed immediately.
The most fiercely contested commercial product was furs, which played an important role above all for trading companies. Perhaps 18% of the men born between 1680 and 1719, who were at least 15 years old and mostly unmarried, worked in this for a time. In the 1730s and 1740s their share rose to as much as 20 to 25%.
The fur trade was concentrated in Montreal and after 1763 was only taken over by the Americans and Scots there. With the western expansion of the USA, however, it gradually lost its importance and by 1820 fell far behind land speculation, wheat, cotton, tobacco and cattle. Only in the west and north did it retain an important role for a long time. The fur trade was in free competition until 1627, when it was now monopolized. But all three monopoly companies failed both in promoting settlement and in enforcing monopoly. In addition, they were in fierce competition with the Indians, such as the Mohawk , who claimed a hunting monopoly and enforced it against the Hurons by force. This gave them a certain amount of price control. The French traders avoided going north and now preferred the route across Lake Nipissing to Sault Ste. Marie and the Strait of Michilimackinac north of Lake Michigan . But in 1663, with military support from France, it was again possible to trade across the Great Lakes and the Mississippi region , which René La Salle reached in 1682. However, the enormous distances required a system of intermediate storage facilities. There they dealt directly with the Indians.
There was no monopoly between 1663 and 1713, and so there were only short, highly price-dependent contracts between all parties involved. The price fluctuations were enormous. Towards the end of the century, hunting was subject to fierce competition, while shipping, processing and export were increasingly subject to oligopolies that dictated prices and conditions. The hunters delivered so large quantities that they wiped out entire species and regional occurrences.
In addition, the oligopolistic structure led to a strong influence on politics, which in turn endeavored to secure trade routes. In this detour, the fur trade led to greater administrative penetration and a certain cohesion of the vast areas. The competition in the trade formed large regional focal points, such as the areas of the Hudson and Mohawk regions, the St. Lawrence and the Mississippi. However, the cost of trade defense far outweighed the profits. Rather, their justification was imperial rule and competition with other empires.
Although New France built forts to maintain the monopoly, Britain fought that monopoly by encouraging French traders to emulate their English rivals. Radisson and Groseilliers successfully turned to London in 1670 to form the Hudson's Bay Company .
The decisive threat to French rule, however, was not competition in the fur trade, which kept England's Iroquois allies in line, but the advance of British colonization and thus its agricultural economy. The Ohio Land Company , founded in 1744, penetrated French territory as early as 1752. This led to conflicts in the course of which Virginia declared war on France in 1754, which finally ended with the withdrawal of France in 1763. But that in no way stopped Montreal from continuing to dominate the fur trade. It was as if the fur trade had nothing to do with French rule.
British colonial policy favored Montreal. In 1774, the Quebec Act reserved all areas beyond the Appalachians for the fur traders there, so that many traders from Albany went to Montreal, including John Jacob Astor . But after 1776, and especially from 1794 ( Jay Treaty ), Montrealers were excluded from the western United States, which after 1800 proved to be extremely attractive. Astor returned to Albany in 1809 and the American Fur Company he ran founded Astoria at the mouth of the Columbia River .
The fur trade was subject to an extreme process of concentration during this period. The hunt of the Montreal people shifted far north and west. Only two companies survived , the North West Company and the XY Company , but in 1804 even these two merged to form the North West Company . After she bought Astoria in 1811, only the Hudson's Bay Company (HBC) remained next to her . She succeeded in reaching trading stations by flat boats, thus achieving a cost advantage and ultimately moving trade from Montreal to Hudson Bay and ultimately to London.
Agriculture remained the basis of the economy, not the fur trade. Nevertheless, the political consequences of monopoly societies, which had close ties to governments, should not be underestimated. HBC in particular played a decisive role in the development of British North America.
What, to some extent, economically integrated this vast area, little touched by Europeans, was its focus on Britain. This was related to the Navigation Acts . These laws were intended to direct the colonies' production and trade towards Great Britain. This should protect investments, secure income and give Great Britain economic and political independence from mainland Europe. The economic interests of the relevant circles ensured that rivals in the colonies were made as difficult as possible. In this way the colonies could be turned into producers of raw materials, while the finished products were made in England - the Indian economy was ruined in no other way.
The population figures show how superior the southern British colonies were in the meantime: In 1750, around one million white settlers lived in New England, compared to only 50,000 in New France.
Intensification through canal construction, 1750 to 1850
The Maritimes between 1784 and 1870
After the Treaty of Utrecht in 1713, the fishing industries of New England and Nova Scotia expanded at the expense of French fishing. The fortress Louisbourg disrupted the connection. The British built Halifax . To do this, they brought 2200 German settlers to the region who were settled around Lunenburg . When the Acadians backed Louisbourg in 1755 and raided Dartmouth , the British took action and left the Annapolis Valley. Their land was given to New England settlers. They also settled on the Bay of Fundy , Scots and British settled on Cape Breton and on Prince Edward Island. Nevertheless, around 15,000 of the 20,000 settlers in Nova Scotia in 1772 were from New England. The first ship masts were exported to England that year, and the first timber export followed in 1774.
After New Brunswick came Scots who fled before the division of their country among cattle landowners loyalists from the USA and refugees from famine in Ireland . By 1850 there were 277,000 people in Nova Scotia, 194,000 in New Brunswick, and 72,000 on Prince Edward Island. The population had thus quintupled within half a century. The ownership structure was often so unclear that Prince Edward Island had insoluble problems with the quit rents and property titles that drove many out of the country. From 1806 the land should simply belong to whoever worked it.
The break with the emerging USA forced intra-colonial trade to be relocated. To do this, however, there had to be buyers for British goods. From the 1820s onwards, industrialization began, especially in Halifax. London also encouraged trade by setting up free ports. From the 1840s onwards, the coastline increasingly served as a trading hub with the United States. This was due to the fact that wheat from the USA, which was ground in Nova Scotia, was allowed duty-free from 1849 from the mainland to Nova Scotia and from there to the British colonial empire. But the region got into a trade crisis when the unregulated access to wood led to the numerous logging companies simply plundering the forests. For a number of years there were proposals to protect the economy through tariffs, but free trade prevailed. This also applied to New Brunswick from 1853.
As early as the 1830s, Joseph Howe advocated connecting the coastal economy to the hinterland by railways. The first line was a coal railway at Pictou (1838). In the 1850s, connections were established from Halifax to Truro and Windsor , from St. John's to Shediac , from there to Truro and from St. Andrews to Woodstock . But a region with such weak agriculture was hardly able to raise such a huge investment. When the negotiations for the Canadian Union began in 1864, many hoped for a connection to a continental rail network that would open up raw materials and markets.
For industrialization there was a lack of additional profits from production in order to be able to invest in industrial fields of activity, but also the necessary surplus of rural labor in order to be able to supply a capitalist wage labor market. The latter could only support immigration, the former practically only British or US capital. In fact, around half a million immigrants came to British North America between 1770 and 1814 , around one and a quarter million between 1815 and 1863, and more than 600,000 by 1890. Since the whole of Canada had 4,883,000 inhabitants in 1891, one would think that every second person was Irish , but many of the immigrants moved further west, not a few to the USA. Despite heavy Catholic immigration, two-thirds of Canadian Irish were Protestants in both 1847 and 1871. In contrast, Montreal in Giffentown and Toronto in Cabbage Town had their own Irish Catholic quarters in the 1860s. When the two colonies applied to be renamed "New Ireland", the Irish made up over 50% of the population on Prince Edward Island and two-thirds in New Brunswick.
Francophone Québec
The French-Canadian population shifted between 1763 and 1840, the proportion of urban population declined. The industrial centers of Montréal and Québec also became meeting points for English speakers. The proportion of the urban population fell from 25% in 1760 to around 10 in 1830. Only the British American Land Company , which was founded in 1834 and worked according to capitalist principles, was more successful here.
The river traffic between the two cities intensified. The first steamboat operated from 1809, and a regular line was added in 1816. In addition, numerous flat boats supplied the landing stages and post stations on the river banks. Carriages started running in 1811 and covered the route within two days, even in winter. In addition, there was a winter road to Halifax from 1814, a road connected Québec with Boston, a Montreal with Lake Champlain to New York . The first (private) railroad ran between Montreal and Portland in Maine from 1836 .
Much was withdrawn with the Quebec Act of 1774 to win support from the Francophones. So the civil code was reintroduced and the system of seigneuries, a system that could expand the cultivated land by two thirds over the next twenty years. However, there was only a very thin Francophone class of business people. Among the 2000 French who left the colony after 1763, there were many traders, but also officials and seigneurs. Two seigneuries were awarded, but no more followed between 1764 and 1784.
To cushion the tensions caused by the influx of thousands of English-speaking loyalists, London divided the colony into Upper and Lower Canada . It was left with the seigneurie system, but new assignments had to be made freely. The unification of the colonies in 1841 was an attempt to assimilate the two relatively small colonies. In 1854 the Francophones actually abolished the feudal system, albeit for economic reasons, because the local agriculture was falling behind. Meanwhile, the population of Upper Canada quadrupled between 1790 and 1850 from 200,000 to 800,000.
Yet agriculture declined due to a combination of grain diseases, insects, and soil depletion. Wheat production fell between 1831 and 1844, so even wheat had to be imported. Wheat from the west was cheaper despite the transport costs. This was due to the expansion of the canal network - the Erie Canal was opened in 1827 .
This development was not in the interests of the Montreal-based retail class. They rather benefited from colonial, England-oriented trade, and they demanded the role of the central port of export for American goods to London. Therefore it promoted the canal expansion, the import of American wheat, the maintenance of the government and banking system. In contrast, the farmers demanded protection from cheaper competing goods, land allocation without feudal obligations, an adaptation of the banking system to rural needs - and “responsible government”. This conflict was the backdrop to the colony's crisis of 1837, when a financial crisis, a crop failure and two armed insurrection attempts coincided. In contrast, the very similarly structured agricultural economy in the Madawaska region did not experience such a crisis. The settlers were mostly squatters . Free ownership of arable land resulted in lower production costs.
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The Rideau Canal originally had a strong military component. Nevertheless, shipbuilding was still organized according to pre-capitalist, craft principles. Their lack of capital made the transition to steam shipping, which required considerably more capital, almost impossible. Hence, she went through a deep crisis. In 1825 3355 workers worked there, in 1831 only 1155. The recovery phase then began, so that in 1847 already 4600 workers were under contract again. In addition, the potash industry benefited from deforestation in the country and produced 100 production facilities. Flour mills, especially the mills on the Chambly Canal , became a grinding center for the entire region from 1784 onwards. In 1844 cotton was also processed here, along with paper.
Nonetheless, it was Montreal that initiated steam shipping. In 1814, a 650-ton ship was built for the St. Lorenz, from 1831 steam engines were built in the city, and in 1846 already in four factories. Breweries and blacksmiths were built and wagon builders settled there. In 1851 Montreal already had 58,000 inhabitants, Québec 42,000, Trois-Rivières, however, fell far behind with 5,000 inhabitants. Around 54% of the population in Montreal was native English speakers. Québec, where only 35% spoke English, was much more focused on wood and shipbuilding, and especially more on the British market.
Upper Canada
Montreal was in competition with Philadelphia and New York. It drew the harvests of the west into its port. This led to a competition for these export goods, which was conducted by canals and railways. But Montreal's ambition failed at the Erie Canal, which enabled the Canadian West to sell its products to the USA and from there to Europe.
British North America became particularly important to the Empire during the Napoleonic Wars , but also during the British-American War (1812-1814). The Canada Trade Act of 1822 set uniform taxes that amounted to around 15% for exports to the UK. London cut tariffs when prices were high in Great Britain and increased them when prices were low. In contrast, US exports to Great Britain were subject to a constant tariff of 30%.
In 1831, the Colonial Trade Act abolished the levies on US agricultural products entering Canada. This was to the advantage of Great Britain and the Montreal-based middlemen, but Upper Canada resisted the unpleasant competition. After the rebellions of 1837, Lord Durham was dispatched to recommend the unification of the two colonies, as this was most likely in the British interest.
In 1843 the British Parliament passed the Canada Corn Act , which allowed Canada to export to Great Britain at a fixed price of one shilling per eight bushels of wheat. The appeal of the Canadian market was enhanced by the fact that US wheat milled in Canada won the same privilege. However, the US responded in 1845 by allowing duty-free transit for Canadian products through canals and railways. So they forced the withdrawal of protective tariffs within a few years. In 1845 not only were the tariffs on timber lowered, but in 1849 the provision that allowed colonial products only on British ships to be removed from the Navigation Acts .
Montreal's special position collapsed suddenly. In addition, there was a first financial crisis, and London also had to be ready for responsible government . The Montreal people pelted the lieutenant governor's car with rotten vegetables, burned down the government building and published a declaration of annexation ( annexation manifesto ) to the USA. Canada threatened to break up.
Initially there was little need to import finished goods. Wheat and flour, wood and potash brought the necessary profits. In 1806 these raw products contributed around 50% of the profits from foreign trade, in 1830 this was only around 25. The export of wood brought the greatest profit, with exports to the USA gaining in importance from the 1840s, albeit to Great Britain still dominated. From 1779 to 1808, St. John's was the main port of export, but it was replaced by Québec. Similar to the fur trade, perhaps 20 to 30 buyers dominated the buyer's side, while small producers dominated the supplier side. In the beginning the suppliers brought their wood to Québec on a speculative basis, but this procedure was soon replaced by long-term contracts that were informal in nature. From 1820 Kingston played a bigger role, but the wooden border moved further west and reached Georgian Bay around 1840 , Michigan twenty years later .
The so-called gang saw prevailed , in which water-powered multiple saws were used. Since hydropower was a crucial factor, Bytown in the Ottawa Valley became the focus of a group of sawmill operators from around 1860. From 1832 on, the Rideau Canal brought wood to Kingston and across Lake Erie to Oswego , an opening in the Canadian forests to the south that was reinforced by the railroad construction.
After 1860, the wooden ships were increasingly replaced by iron steamboats. In addition, the price of wood was highly speculative. Liverpool was the center of imports to Great Britain, so that its imports as well as the legal framework and tariffs, plus the weather on the Atlantic, determined the price. A long winter in the wooded areas or low water levels in the rivers caused prices to collapse in the spring, when the rivers became free, because an oversupply forced the market. This was especially true in the early phase when everyone could “make wood”. At first it made money for the settlers, but the wood was soon used up. The profits on the Canadian side were small, those on the US side considerably higher. When exports collapsed, many settlers moved to the emerging cities and worked there in simple professions - so, in times of low capital, an inexpensive workforce was available. It is difficult to understand, given the tremendous destruction in the Canadian landscape, that the economic effect in Canada was so small.
Agriculture developed quite differently. The Indians in Ontario had already developed intensive agriculture with corn, beans and pumpkin, along with the corresponding trade routes. Simcoe had offered land to American settlers so that up to 80% of Upper Canadians were born south of the Canadian border, only 20% of them were loyalists. In the 1860s, the last agriculturally usable areas were given to settlers. While Upper Canada had around 10,000 inhabitants in 1784, there were over 70,000 in 1806, 952,000 in 1851, and ten years later almost 1.4 million.
Exports increasingly went to the United States and Upper Canada became a major supplier to Boston , New York, Philadelphia and other fast-growing cities. The competition with US farmers, but also American suppliers, forced the Canadian farmers to adapt quickly to technical innovations. This development began even earlier with cattle, especially with new breeds.
So the capital to rebuild the country hardly came from bulk exports such as Virginia's tobacco or the sugar from the West Indies. It came from payments to the loyalists, property brought in by the settlers, military spending, and investment capital for canals and railways.
Manufactories
In 1820 Toronto had 1,250 residents. Many Indian villages were considerably larger. Only Kingston, with a population of 2,300, had urban trains.
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The local production facilities had the advantage that they were initially protected because of the poor road conditions. With the improvement of the paths, new opportunities arose, which, however, rather led to the existing industries being relocated to the regions and places that were now opened up. Steam engines were first manufactured in Toronto in 1833 with 80 employees. There was also a certain iron industry. In 1851 there were 1500 such production facilities in Central Ontario, including 756 sawmills and 282 gristmills, but also 9 shoe and boot factories, 10 cabinet makers, etc. Specialization increased. Toronto, the largest city in the west with a population of 31,000 around 1850, was more diversified. In addition, it was able to bring its goods to Montreal, bypassing Kingston, and it was also connected to the USA, especially New York, to which a telegraph connection already existed in 1847. So the first railroad came from Toronto in 1857.
Banks and money
The first attempt at establishing a bank took place in Montreal in 1792. In 1817 and 1818 three private banks were founded, all based on the model of the First Bank founded in 1791 in the USA, one was even owned by the US. All banks issued money, which was initially an insecure system. London allowed the provinces to set up banks, first the Bank of New Brunswick in 1820, the next year the Bank of Upper Canada , the following year the Bank of Montreal . By 1840, 18 banks were licensed, 7 of them in Montreal alone. Nevertheless, money from private banks was allowed up to around 1850, but now only banks that have been approved were tolerated.
Canada imported more goods from the US than it exported there, so there was an outflow of money here. The USA imported more from Great Britain, which in turn imported more to Canada. Britain brought more money to Canada. Depreciation of the colonial coins helped to boost exports through low prices, but the expensive currencies disappeared from the market. The US has been a destabilizing factor in this regard. Only the guarantees of government-approved banks helped to maintain confidence in convertibility . From the beginning of the 1840s, the banks had to pay a levy for their banknotes; in addition, they were only allowed to issue large notes, from 5 pounds and up. London issued overvalued coins in the 1820s, that is, the face value was above the precious metal value.
A major accusation of the 1837 uprisings was that the merchant elites were using the banks to their advantage. Above all, the agrarians resisted, who with the introduction of responsible government also managed to establish free banks. This was done according to the US model, as was the introduction of the decimal system for dollars and cents from 1857.
In the crisis from 1835 to 1837, when paper money was massively devalued for gold money, which US President Andrew Jackson reinforced by the fact that land purchases could only be made with gold money, six of the 21 banks in Canada in 1836 went bankrupt.
The West
From the beginning, British Columbia offered raw materials that sometimes fetched astonishing prices on the world market. The first product to generate such high profits that it attracted hundreds of ships was otter fur , which was extremely popular in Macau. This also shows a second constant, namely the orientation towards the Pacific and not towards the rest of Canada. The local Nuu-chah-nulth Indian groups were able to gain a local monopoly of trade while Spain and England struggled for supremacy.
When Simon Fraser reached the mouth of the river named after him in 1808, there had been a trade in fur for twenty years, over which Spaniards, Russians, but above all British and US Americans fought. Meanwhile, the leaders of the regionally dominant tribes tried to monopolize trade. As a result, prices rose on the one hand, and many Indians were included in the indirect trade on the other hand, who were still inaccessible to the European traders of the HBC and the North West Company. In 1813, the North West Company bought the American Fur Company's trading post at the mouth of the Columbia, eight years later the two British companies were merged, eliminating all competition and leaving the remaining HBC with an extensive monopoly. The fur trade to Asia was initially controlled by the British East India Company . In the early years from 1778 to 1813, the North West Company had traded primarily through the agency of J. and TH Perkins in Boston.
But in 1846 the USA enforced with its settlement policy that the 49th parallel became the border with British North America and the HBC had to vacate the area south of it. Victoria on Vancouver Island , which was only founded in 1843, became the central transshipment point. While there was no danger that American settlers would move north, when the Fraser Canyon gold rush broke out in 1858 , thousands suddenly moved north and Victoria became an Americanized city overnight. The governor struggled to keep the prospectors under control while avoiding a confrontation with the United States. In order to do justice to this task, a lot of money had to be invested in the infrastructure, numerous Europeans were brought into the country to create a counterweight, and in 1858 a colony of British Columbia was founded next to the colony of Vancouver Island .
In 1867 the United States bought Alaska, which had been dominated by Russian traders for around 150 years. In 1866, London united the two westernmost colonies into a single colony, British Columbia, while in the east the colonies merged to form "Canada". In 1869, London recommended that the HBC buy the area. In British Columbia, which was economically unrelated to the east, the only option was to build a transcontinental railroad. This was the central condition for accession because the province could not have financed the rail link itself. On the contrary, it was hoped that accession would provide debt relief and a way out of the financial crisis that had threatened the colonies since the end of the Fraser gold rush.
In the early stages, the economy was based on gold discoveries, along with coal, wood and fish. In addition, there was agriculture in a few areas, especially where Indian cultures had already transformed the landscape, such as in the south of Vancouver Island. But the fur trade, which was based on beavers for a while , soon fell drastically. As the population grew, equipment first became important for the prospectors, but soon also flour mills, a beer and spirits, and finally a shoe and furniture industry. Victoria, which had a population of around 400 before the gold rush, had a population of 20,000 at the height of the rush, but fell back to 3,000 by 1867.
The early agriculture of the newcomers mainly served to supply the forts with what one could not buy from the Indians in the area, namely grain, potatoes and the wide range of domesticated animals. In 1813 the first farm was built near Fort Vancouver. It was not until 1839 that the HBC began to win agricultural products for trade with the Puget Sound Agricultural Company it had founded , for example with the Russians, who exchanged grain for fur.
The cascade of gold discoveries from 1858 onwards also gave a strong impetus to agriculture. Tens of thousands had to be provided with provisions, and so numerous farms arose around Victoria, but also on the lower Fraser, especially around New Westminster. Numerous river navigation-related employment opportunities arose around Yale , as the gold diggers had to go up the river, which was even more true of the Cariboo gold rush that began in 1862 . On the other hand, private road construction projects failed because of the difficult terrain, sometimes also because of Indian resistance, such as the Chilcotin War .
After 1866, attempts were made to promote agriculture just to keep the numerous stranded gold prospectors busy. In 1871, explorations began further north, and in 1874, the sale of settler sites began according to the US “homestead system”. Since the mountainous region offers only a few large settlement chambers, plus numerous small ones, conflicts arose with the Indian tribes resident there, who were already hopelessly outnumbered by the invaders. Unworked land was rigorously confiscated and given to settlers, and Sumas Lake was even drained for this purpose. The Indians were forced into reservations within a few years, which were reduced in size if necessary, or built through the streets.
The traffic conditions delayed this development for decades. It was not until 1836 that the first steamboat sailed on the coast, and here too American and British laws prevented the development of Indian coastal shipping, even if the Makah in Washington managed to maintain steamboats for some time. The postal system was largely in the hands of the coastal Salish , who also handled the small goods trade across the border. Only the smallpox epidemic of 1862 , which completely wiped out some tribes and decimated others by more than half, destroyed this economic activity and threw the Indians into a mostly secluded life that was not connected to the general infrastructure. At the same time, the labor market was stabilized by Chinese immigration.
The Fraser Gold Rush caused the first significant inland shipping connection, and roads extended this connection northwards. In 1863, Governor James Douglas proposed the construction of a road to the Red River in Manitoba, and the Canadian Confederation promoted the construction of a railroad, which was completed in 1885. The telegraph connection, which was initially supposed to run overland through Siberia, developed in a similar way, but was then made obsolete by a submarine cable that initially connected the Atlantic coast with Europe.
Similar to the fur trade, the timber trade in the isolated region received its first impetus from the Pacific side. In 1824 the first cargo of wood landed on the Sandwich Islands . Even when California's population grew rapidly as a result of the first gold rush, hardly any wood landed there, instead delivering to the French and Spanish colonies in the Pacific. The first paper mill was built near Victoria in 1854, and the first sawmill near Port Alberni in 1861 . The timber industry followed neither the settlement boundary nor the deforestation boundary, because there was no connection to the agricultural economy that otherwise followed in Canada, especially in Upper Canada.
The boom initiated by gold was followed by an economic crisis in the late 1860s. Wood prices rose due to the Crimean War . New sawmills sprang up on Burrard Inlet , but in 1862 the Civil War in the United States brought down the regional market. When the war ended in 1865 and the Fraser boom also died down, credit became scarce and the indebtedness of the highly capitalized timber companies grew rapidly.
The role of the fishing industry in the first few decades is unclear. Apparently fish as a commodity was considered so uninteresting that the Indians were regularly allowed free fishing. The HBC occasionally delivered fish to California, as in 1824, but the industry did not play a major role. It only began to gain importance in the 1860s, so lobby groups ensured that the Indians were eliminated as competitors by law. In contrast, coal played a role as a fuel for steam engines as early as 1836. The US mail ships picked up coal from Vancouver Island, and in 1851 coal mines started their work at Nanaimo . The most important customers were the industries in California.
New Westminster , the capital of British Columbia in 1860 and rival of Victoria, was not a free port and did not experience a massive rush of gold diggers. Its basis was on the one hand agricultural, on the other hand it was based on the timber industry, especially at Burrard Inlet, where huge trees stood, the remains of which are in what is now Stanley Park . But with the connection to the transcontinental railroad, a different kind of boom began here. But land speculators had driven prices in neighboring Port Moody so high that the CPR switched to Granville, which was soon to be called Vancouver .
With the influx of settlers from 1858 onwards, the HBC not only struggled to enforce the law, but also to maintain postal services, land surveys, and general administration. Revenue came only from land sales, mainland tariffs (up to unification), and prospecting permits. In particular, the income from the gold discoveries fluctuated extremely. In the investment area, there was a high need for credit that HBC was unable to meet. Since London did not step in here, the debt grew.
The banking system was far too weak. During the gold rush, the Bank of British North America and the Bank of British Columbia emerged , which depended on British capital, and Macdonald's Bank , which had local owners. British banks made money from the gold diggers, but the local bank went bankrupt in 1864 after being robbed. The deposited assets were destroyed.
As early as September 10, 1846, the colonial secretary wrote to London that only settlement by British subjects would help against American expansion. But this settlement initially failed. The small but influential regional elite also managed to achieve an undisputed position. They also held extensive land holdings on behalf of and through HBC. Their position is definitely comparable with the so-called Family Compact Ontario and the Chateau Clique in Québec.
In 1863 Great Britain declared 60 degrees of latitude to be the northern border of British Columbia, while demands were made in the US Congress to move the northern border far north. Strong forces agitated in Victoria for a connection to the USA, in 1866 a petition went to Washington, in which the president was asked to annex the area. This gave the representatives of responsible government in the province a strong tailwind. London came under pressure, both in the west and in the east, where the Confederation was pushing ahead. Amor De Cosmos , who had started his political career in Nova Scotia inspired by Joseph Howe , came to British Columbia as early as 1859 . He founded the British Colonist to enforce responsible government here too - like Howe in Nova Scotia. In 1864 a second newspaper came out, John Robson's The British Columbian , a paper whose aim was similar. Governor Douglas resigned.
Ottawa's promises of railroad construction and telegraph lines as well as protective tariffs and debt assumption, plus responsible government , briefly opened the view to the advantages of a connection to Canada, advantages that were delayed or did not materialize at all. It was believed that the shift in the economic focus from fur and gold to coal, wood, fish and flour could be achieved more through a connection to Canada.
John Sebastian Helmcken , one of the spokesmen, feared that the revenue would flow to Canada, but Howe and Robson came to the opinion that railroad construction and protective tariffs would overcompensate for these losses, including De Cosmos. When the economic effects did not materialize and the construction of the railway was delayed, De Cosmos pursued a separatist policy.
Opening up the continent: railways from east to west
The Canadian Pacific Railway was not the first rail link in Canada, but it was the largest and the least economically driven. The founding of the confederation in 1867 caused the colonies on both oceans to demand infrastructural connections to the centers of Ontario and Québec. Neither Nova Scotia nor New Brunswick nor British Columbia would have acceded had it not been for these promises. Without railroads, the territories would have joined the United States. The colonial power of Great Britain was behind this drive to weld the area together and thus prevent precisely this.
The First British Empire ended in 1783, a mercantilist and expansionist empire was created. The Second Empire was dominated by Whigs economic ideas, free trade and railroad imperialism, and almost even more expansive. The Third Empire, from about 1883, varied mercantilism into protectionism when it served London.
The First National Policy - it denotes an intermediate position between imperial British and regional-colonial interests - was no longer imperial, but was nevertheless aware of the dependencies, the Second National Policy was an integral part of the railroad operated by London during the Third Empire, if not financial imperialism.
Mining, logging, wheat
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After 1850, the raw timber trade with Great Britain declined in favor of sawn timber to the USA. But in the case of mineral resources, the own demand was so high that in the case of copper and nickel, even the rich finds at Sudbury were insufficient. The small copper reserves north of the Upper Lake did not help either. The deforestation line ran from New York into the Ottawa Valley westward through southern Ontario.
During the settlement stagnation after 1866, the number of sawmills did not grow any further, but they became larger and more efficient. Circular saws, steam engines and water turbines allowed the Canadian timber industry to spread to Michigan. Only with the booming newspaper industry with its high demand for pulp was it worth returning to Ontario, especially in the north of Lake Superior.
In addition, there was the increasing demand for energy, which was initially met with the oil discoveries in Ontario in the 1860s. However, export efforts to Great Britain failed because of the poor quality and smell of Ontario oil.
Both oil and salt, which were marketed in Milwaukee and Chicago, proved that industrial use would not progress without government research and training, especially universities. Since then, the relationship between industry and the natural sciences in Canada has been particularly close - and prone to two-way intervention. When Michael Faraday laid the foundations for the telegraph ( Samuel Morse ) and thus triggered a huge demand for copper, which was increased by the railroad construction, this led to a successful search for copper deposits in the west of the Upper Lake and along the US border.
In the case of arable farming, the development initially looked different. In Lower Canada, the wheat frontier was reached in the 1840s, in the west in 1866. As a result, numerous farmers emigrated to the USA, to the new industrial centers in the east and to the growing agricultural centers in the midwest. Those who remained specialized in cattle breeding and other foods such as cheese, which was soon exported to Great Britain. In grain growing, human labor was increasingly being replaced by agricultural machinery, but the need for horses was still stagnating. Together with the growing livestock industry, the demand for land increased overall, but also per farm.
Western Canadian wheat only came onto the world market around 1890. From 1866 to 1886, however, the southern competition was so strong that it caused a decline in wheat production in Ontario. The Reciprocity Treaty from 1854 to 1866 was one of the causes. Until then, the farmers demanded protection, the traders open borders. In 1831 the Colonial Trade Act enforced that US grain should not be hindered by tariffs. In 1842 and 1843, Great Britain reduced import tariffs on Canada's wheat with the Canada Corn Act . At the same time, the colonial government raised tariffs on American imports from 1843. In 1854 this policy was turned back. This led to growing trade, from which Canada as a whole benefited, especially since British capital was invested in abundance. But the farmers were also able to benefit from the rising wheat prices and the new export opportunities.
The Crimean War , however, put Britain in a difficult financial position, so the government hoped to use higher tariffs to cope with the deficit. In 1857 the situation worsened in the form of a trade crisis because less investment was made in railways, and there was also a poor harvest. Strong groups in Canada, always on the lookout for sources of revenue to finance the state, hoped for a resurgence of imperial trade.
The Reciprocity Treaty increased the consumption of the goods of the other country and thus promoted the expansion of the connecting north-south infrastructure. Wheat and flour were by far Canada's most important export products. It made up around two thirds of exports. While Canada imported $ 3 million worth of grain in 1856, it exported $ 8 million worth of wheat. With the exception of agricultural products, however, imports exceeded exports by a third between 1850 and 1859.
Railway policy
One of the main driving forces behind rail policy was Francis Hincks , Canada's Treasury Secretary. With the law of 1849 an inter-colonial railroad was to be created, which was to connect Canada with the Atlantic provinces and thus with the mother country. The Shares should be issued for all segments greater than 75 miles and earn 6% interest. A central connection was to be created from Québec to Toronto, the prospectus was issued in April 1853. In the Board of Directors also sat Finance Hincks.
At the same time, rural and urban places were asked to buy shares. The Consolidated Municipal Loan Fund was launched in 1852 so that they could borrow the money on the British capital market . Land speculation was rampant, so that his property often only changed to rumors about a new railway line. Workers were hired at soaring wages, while rents, food and equipment rose in price. The influx of British capital also prompted the lowest levels of administration, the municipalities , to invest, so that public buildings and facilities shot up.
In 1857, not only were 1,653 miles of railroad completed, but an additional 344 miles under construction. Canada had built almost 100 million pounds in eight years. But the financing overwhelmed many, the promised profits failed to materialize, and the government had to help out to save the construction projects. What followed was a crisis of confidence that followed the boom. Now everything that was needed for railroad construction - tracks, wood, wagons, locomotives, etc. - was in oversupply. On the other hand, the railroad created larger markets with its transport options, such as for harvesting machines, whose sales rose from 413,000 to 2,685,000 dollars between 1861 and 1871.
The first unions emerged, but they were limited to certain cities. The printer's union, the Toronto Typographical Society , was founded in 1844. Above all, the Amalgamated Society of Engineers , which represented mechanical engineers and which was founded in Montreal in 1853 with 21 members, was the oldest union in this branch, grew to 207 members by 1867. The metal workers organized themselves in the International Molders Union , which at that time had 270 members. Unions for unskilled workers did not emerge until 1860 in the tobacco and shoe industries.
The Association for the Promotion of Canadian Industry played an important role in economic policy. At the end of the Civil War, both the United States and Great Britain and the agrarians of the West, led by George Brown, pressed for a weakening of protectionist policies. The Manufacturers Association of Ontario in particular pushed for a national policy in 1875. In 1876 the Toronto Board of Trade also voted in favor, but the Dominion Board of Trade did not reach an agreement until 1877. In 1879 it became the guideline for the whole country. The producers of the respective product groups met, agreed tariff demands and put them together. Sir Leonard Tilley accepted these cumulative demands almost unconditionally. Railway construction and prairie farmers played no role at all.
Banks and financial institutions
A state bank had already failed in the early 1840s, so that private banks were set up based on the US model from the early 1850s. These banks were allowed to spend money if they bought government debt for it. But many banks went bankrupt. Many invested in industrial production, but the changes in direction were too abrupt and too much dictated by political interests.
There were phases of pronounced bank growth. As early as 1831 to 1836 their number had risen from 6 to 21, from 1854 to 1858, in a sharp speculation phase from 15 to 30, and finally from 1870 to 1874 from 34 to 51. But that was the climax, followed by a phase of decline. of acquisitions and bankruptcies. Nevertheless, the Toronto Stock Exchange , which was founded in 1852, proved itself as a trading center for equity capital from 1861.
After the economic crisis of 1857/58, AT Galt tried again to set up a state bank, but his attempts of 1860 and 1866 were only successful when the state acquired the monopoly for issuing one- and two-dollar bills. The Financial Reform League wanted to use the monetary system for economic expansion. They tried in vain, since Canada was not subject to the gold standard , to forego gold reserves. In the end, neither group prevailed.
The banking crisis from 1863 to 1864 began with the Bank of Upper Canada , which had taken over the railroad financing. When LH Holton replaced Treasury Secretary Galt, the bank was no longer able to provide loans to the government, so they turned to the Bank of Montreal . The bank's general manager, EH King, placed the condition that his house replaced the Bank of Upper Canada as fiscal agent - something the government was forced to do a year later in the face of a tumbling Upper Canada bank. Despite repeated calls, King refused to support the Toronto banks and when the bank collapsed, it carried away the Commercial Bank of Kingston .
At least the government managed to get enough small units into circulation. Following the US model, the government sold bonds and issued cash on that basis. Only the Bank of Montreal bought these bonds, so it basically became the state lender. The bank, in turn, did not have to show adequate gold reserves - unlike all other banks.
Prime Minister King suggested making the Montreal Bank a government bank, similar to the Bank of England - a central bank. The commercial banks (chartered banks) should serve especially the trade, especially the international one. A third banking group should be responsible for manufacturing and agriculture. Similar to the US dollar, the banknotes should no longer be redeemable; they were issued by all banks, provided they bought government bonds.
As soon as the Canadian Bank of Commerce was established, the Bank of Upper Canada collapsed. When the government of newly formed Canada met in July 1867, Galt was again Minister of Finance. Then on November 8th, the Commercial Bank of Kingston collapsed. Galt resigned shortly before. But the Western banks, led by former Bank of Montreal employee William McMaster , who was a senator and chairman of the Senate Committee on Banking, saw this as support for the Montreal people to the detriment of the West. McMaster accused the bank of not having spent in the service of Canada, but in currency speculation in New York.
McMaster would certainly have resisted if his Bank of Commerce had n't been dependent on the goodwill of the government. So this role fell to the former employee of the Toronto Bank George Hague . He got all the relevant banks behind him and was able to overthrow Treasury Secretary Rose. The bank headquarters of Halifax, Toronto and the city of Québec faced Montreal. Rose's successor was her exponent, Francis Hincks . In 1871, the Bank of Montreal lost its privilege with the Bank Act . The government continued to issue only small notes - given the severity of the confrontation and conflicting interests, a central bank could not be enforced.
National politics
In Canadian economic historiography, there are three phases of national politics. In 1873 a crisis hit the Canadian economy, which was also virulent elsewhere. The factories accordingly called for protective tariffs, as they did in 1858. But now the areas that had joined had to be taken into account. Joseph Howe's Anti-Confederation League saw only new colonies of Canada in the Atlantic areas. In the meantime, too, many regretted joining in the west, where one still waited in vain for the rail link and the extractive industry benefited little from protective tariffs.
Prime Minister Macdonald called for a more unifying economic policy against these separatist groups. He promulgated a policy of balanced growth in 1876. D'Arcy McGee called for rail links as a means of integrating Canada, and protective tariffs should reinforce this integration. A country could only come into being if it had an independent economy, which also included increased immigration. All three believed in a complete dependence on raw material exports. Macdonald, on the other hand, believed in the country's industrialization and exports.
A meeting of five Conservative members of the House of Commons was held at Albert Hall in Toronto in 1879. A financial reform group emerged that was supposed to promote its own currency. But the private banks, affiliated in the Canadian Bankers Association , rejected the group's proposals. In doing so, it prevented the establishment of a central bank as it did in 1871.
The Second National Politics
The railways displaced the canals and advanced into areas where canal construction was impossible. The first connection between the oceans was established in 1869, followed by the Canadian connection in 1883. By 1890 the Americans had built 175,000 miles and three transcontinental routes. Nevertheless, the railway construction itself was only responsible for 3.5% of the GNP. Industrialization was the real pace, along with urbanization. Most of the capital came from the UK to carry out large construction projects. A laissez-faire style developed in economic policy.
Mining dominated the northwest after 1860, herds of cattle in the west after 1870, large farms, heavily mechanized, dominated the prairies around 1890. State income shifted from land sales to tariffs, especially protective tariffs. The state largely withdrew from the actual economy, sometimes enforced by the courts. By 1900 the economy was largely integrated, independent of outside capital. Nevertheless, a regionalism still prevailed, which delayed integration.
The New Imperialism was relatively free in the British Empire a phase trade. Driven by superior weapons and technical innovations, European countries occupied almost the whole world, and only Latin America was able to free itself from the old imperialist states. The Monroe Doctrine of 1823 barely sealed America off as a US area of interest, so that Mexico and Canada became new investment destinations. The political will to counterbalance it was there and had spawned the Dominion. The British North America Act brought half the continent under federal government.
But there was still no consortium to build the railway. 25 million acres of land had to be made available, plus $ 25 million, as well as a guarantee of 10% interest. Military interests, as it were, to secure the entire Empire against the rest of the world, mobilized enormous forces and capital. The Second National Policy was only one component of this. In order to pay off the mountains of debt that resulted from this, wheat exports were promoted and tariffs were used. These attempts left the false impression that Canada was an export country of bulk goods.
Money and banks
The phases, known as the First and Second National Policy, were characterized by the need to finance government spending through fiscal means. The aspects of monetary stability and economic development policy were only of secondary importance in this context. The economic policy was hereby interwoven mainly through the customs policy, which served both sectors. But this was primarily in the service of foreign trade, the stimuli that came from the British Empire or the USA. Accordingly, it could promote or hinder imperial or American trade and thereby differentiate between goods. But this was an extremely crude tool for regional economic development. In this way, customs policy has repeatedly become a bone of contention for conflicting interests and their contradicting assessments.
In the first phase of national politics from 1858 to 1883, the economic core of the country between Montreal and Upper Canada dominated. Thereafter, the focus was shifted to the needs of the transcontinental economy and its need for external capital, which assigned the banks a task above all as facilitating trade. In 1871 the proposal for an integrated central banking system was rejected by the regional banks. The monetary system was implemented only half-heartedly, The Union Banks were also turned down.
Even if the government issued banknotes, the dominion notes , which could theoretically be exchanged for gold, they served more to increase the currency in circulation. With little encouragement for exchanges, the money supply expanded faster than the economy during the construction of the CPR. This didn't end until after 1883 more British capital took over the role of Dominion Notes. Their amount grew at the same pace as the economy as a whole.
The role of gold
In 1819 (1821) Great Britain declared that the coins in circulation ( gold guinea ) should henceforth have a fixed value ratio to gold. 3 pounds, 17 shillings and 10.5 pence were equivalent to the value of an ounce of fine gold . This was the gold standard era pound sterling . By 1900 this standard had established itself practically everywhere. The numerous large gold discoveries in America made a significant contribution to this, because gold, which was more abundant in those times and therefore cheaper in relation to silver, largely displaced silver from the coin production of Great Britain, Canada and the USA, but also Germany.
This happened in several waves. Around 1820 to 1850 prices fell and a bimetal standard dominated. The gold discoveries from 1849 to 1870 in California and British Columbia in particular provided cheap gold. Hardly any new gold was found between 1873 and 1896, and silver reappeared as a coin metal. However, from 1890 onwards, new gold finds largely replaced silver , especially on the Klondike .
One of the arguments in favor of gold was that the available quantities grew with the growing economy; this was especially true of the fast-growing economies, which also made the largest gold discoveries. Finally, in 1819, and more intensely from 1860 onwards, the Bank of England began to influence the amounts of gold available in its interests. She relied on stable value, which she also achieved very successfully. This stability shifted the instabilities, the trade deficits or surpluses into clearly measurable quantities and numbers. A country with a trade deficit had to accept the outflow of gold. But with that the money supply, which was based on gold, fell back. This in turn meant falling prices, which in turn increased exports. In the end, ideally, the trade deficit would even out. This assumption, common at the time, was called gold automatism .
The central banks had the task of constantly adjusting this system by adjusting the reserves. But the investment boom that triggered the railway construction stood in the way. This showed the second property of gold in addition to its function as a medium of exchange, namely the provision of new investment funds. If this happened in several countries at the same time, it upset the system of automatic compensation. With the continentalization of the economy and the recognition of the gold standard by the US, Canada was also forced to embrace it - without a central bank, a major challenge.
The First Bank of the United States was founded in 1791 mainly because the new state needed income. It was by no means the task of ensuring stable monetary value. Starting in 1819, the Bank of England bought and sold gold and silver to keep the exchange rate stable. Germany set up a central bank in 1871, the Netherlands and the Scandinavian countries in 1873, France, Italy, Belgium and Switzerland in 1874, Russia in the 1860s and the USA in 1913 - Canada had refused to do so in 1871.
The gold standard, however, was destroyed by two factors. On the one hand, the amount of gold correlated ever more closely with the amount of money. In 1848 the world's gold reserves only corresponded to 10% of the money in circulation, in 1913 it was already 51. Fluctuations in economic activity could no longer be compensated for. In addition, large-scale technologies required ever larger amounts of credit, so that the supply of money could no longer wait until the gold standard provided a “natural” balance. The fluctuations were far too abrupt and required quick countermeasures.
Bank crunch, queues in front of empty bank counters, panics increased. External factors, especially when they coincided with economic ones, produced serious crises. This applies to the rebellions of 1837 and the crisis of the same year as well as to the Annexation Manifesto of 1849. The crisis of 1858 was connected with the Galt customs system, that of 1873 with the Pacific scandal, the defeat of Macdonald and the CPR policy .
The very big crisis, the First World War , forced the parties to completely abandon the gold standard at times. The war economy could not gain anything from a limited supply of money. The global economic crisis from 1929 to 1939 finally made the gold standard obsolete. Now Canada inevitably needed its own central bank.
Since 1836, with the abolition of the Second Bank, the US central bank became a purely state affair. This contributed to the fact that the states dealt with banks in completely different ways. While the Northeast was building a thriving banking system, some frontier states considered it an immoral business and banned it. Others, on the other hand, endured a banking system that issued coins but never took them back by relocating the collection points that were mandatory to unreachable places (hence wildcat banking ). Around 7,000 denominations were in circulation in the USA. It was not until the destruction of the Civil War, which amounted to over nine billion dollars, that a central bank was forced, especially since government spending alone had been 4 billion dollars. Consumption taxes and income taxes were used to increase government revenues. In order to compensate for the disadvantages caused by the new taxes and to protect their own companies from non-taxed foreign competitors, the tariffs were increased. As early as 1862, the government issued the so-called Green Backs as the national currency, of which 450,000,000 were in circulation. From 1863 onwards, commercial banks were established that issued greenbacks against federal bonds and corresponding reserves. The Federal Reserve Bank developed from this system in 1913 .
By 1873, the price of silver had fallen so far that silver coins largely disappeared from the market. Therefore, the silver production was stopped. In the Great Depression, it was hoped that the issue of silver coins would solve the debt tong. Despite the general deflation, the railways and industry expanded. But the fluctuations also became sharper, so that a financial crisis in Great Britain was enough to reduce the inflow of capital into the USA. With this, gold poured out of the US to offset the negative trade balance. Panic broke out in 1893 and the US government sold gold to prevent bank crashes, much like a central bank.
With the gold discoveries from 1896 onwards, the prices of goods rose again. The pressure to bring inflationary silver money into the market eased. Again, the US defined the value of the dollar in terms of a certain amount of gold.
Canada's path was similar, but its prerequisites were very different, so that in the end a different system emerged. Even Governor Simcoe subjected the monetary system to national policy when he proposed that money expenditure should be made dependent on the amount of wheat harvested and ready for departure to Great Britain.
Robert Gourlay and his student Edward Gibbon Wakefield suggested taxes on "wild" land and land sales as a means of income, Gourlay suggested issuing national money. But there was a crucial difference in the further development. While the US exported more goods than it imported, there was a greater inflow of capital this way. Canada, on the other hand, continued to rely on foreign credit.
When a central bank was finally set up in Canada in 1935, its task was neither to generate income for the state, nor to provide funds for economic expansion. Their task was to secure foreign trade and the flow of foreign capital. It consistently kept prices at the levels of its most important trading partners, that is, Great Britain and the USA. In accordance with the Real Bills Doctrine that dominates in the USA , the bank there should not control the economy, but only react flexibly - just like the Canadian central bank.
As early as 1871, Canada replaced its gold coin standard from 1853 with a gold standard. The Uniform Currency Act defined the Canadian dollar in such a way that it should always have the same gold content as the US dollar. In 1910 Canada tied its dollar to a certain amount of gold, formally adopting the gold standard. The new issue of coins had to be covered by a 100% gold reserve from 1890, so that in 1914 there was an 85% reserve. This practically turned the banknotes into gold certificates.
Despite numerous bank failures, Canada's fragile banking system managed to provide stable money from 1870 to 1914. This was due to the fact that it only had to carry a fraction of the economic expansion burdens, so that the banks could grow in parallel with the overall economy. In addition, their size also gave them a certain independence from individual disasters. They were also able to take over collapsed banks, which led to significant concentration. In 1878 there were 48 banks, in 1928 there were only ten. After all, the New York money market, with its huge proportions in relation to Canadian needs, replaced the function of a buffer from which money could be won, but also withdrawn in an emergency - a quasi-state bank.
The bank lobbyists around McMaster came together from 1892 to form an interbank association, the Canadian Bankers' Association . It acted as a clearing house between the banks. When the money market threatened to dry up during the First World War, Canada abandoned the gold standard. The Finance Act of 1914 allowed the Treasury Department to issue Dominion Notes with no reserve. This experience also paved the way for a central bank in Canada.
Customs policy served to protect economic growth, a policy that continued until the Great Depression. But in the period from around 1870 to the First World War, fiscal interests were in the foreground, because the newly founded state had set itself huge tasks. In doing so, he accepted an economic growth dependent on British capital inflow, to which a banking oligopoly fit, which served to obtain credit. Seen in this way, Canada remained economically in the Empire.
The last attempt at a national economic policy
When the Third National Policy began, it began to be more integrated into the US economic space, an integration that led to the definitive abandonment of a national policy in 1985.
Between 1850 and 1873, the total value of exports to the US was greater than that to the UK. Between 1873 and 1921, apart from three years in the 1880s, it was exactly the other way around. From 1921 this situation reversed again, apart from the early 1930s. After 1946, the USA's share rose well above that of Great Britain.
It looked different with imports. Between 1850 and 1866, apart from four years, the import value from the USA was just as higher than between 1876 and 1896. Only between 1866 and 1876 did more goods or values come from Great Britain - especially during the founding phase of Canada. In 1896 imports from the USA finally passed the 50% mark, and in 1941 they even exceeded three quarters of the total value.
The situation was again different for foreign investment in Canada, the capital inflow. Foreign capital in 1867 was around $ 200 million, of which around 80% came from Great Britain, mostly in railroad shares and provincial bonds . Only 7.5% of the capital came from the USA. In 1899 total foreign capital was $ 1.105 billion, of which 71% was British capital. While the British share of investment capital rose from 41 to 71% between 1900/04 and 1911/13, the share of American investment capital fell from 47 to 22%. So the British liked to invest in government bonds, but after 1900 they also invested heavily in private sectors. In 1930 Canada accounted for 36.6% of foreign capital, including 26% equity capital such as stocks. In 1967 these proportions were 80.7 and 48%, respectively.
After 1900 the customs system was complicated by the fact that the Canadian provinces had enforced separate legislation related to raw materials. Ontario passed its own laws and tariffs for the export of wood and mineral resources. Michigan, for example, resisted by tightening import duties. The Depression of 1907 forced new tariff alliances within and between the parties. For example, President Taft announced a free trade agreement with Canada, which the Canadian public vehemently rejected.
An explicitly protectionist national policy had prevailed in Canada since 1879. But even its advocate Isaac Buchanan was by no means opposed to a reduction in tariff borders against the United States if one were prepared to raise protectionist tariffs for the rest of the world. The situation became critical when the CPR operated in Manitoba from 1882 and many land speculators and soldiers of fortune from the USA speculated. They conspired and attempted an overthrow in the winter when communication with the East was difficult. The aim was to form its own government and join the United States. Even when this conspiracy collapsed, there was hope of free trade with the neighbor. In Ontario and Québec, too, farmers pushed for free trade.
Up until the execution of Louis Riel in 1885, the French Canadians followed a policy of agate chez nous (buy from us). When Manitoba began its anti-French school policy a few years later and Ontario enforced the Jesuit's Estates Act in 1888 , they too believed they would be better off in a country that promised freedom of speech and religion. So in 1891 there was a free trade election.
As early as 1887, Wiman, Ritchie and Goldwyn Smith were traveling the country promoting free trade in public, but Macdonald did not react. The prominent liberal in the lower house Richard Cartwright campaigned for full economic union - he was supported by the US House of Representatives in 1888. The Inter-Provincial Conference of 1887 voted for an “unrestricted reciprocity” (unrestricted reciprocity). But in Parliament the applicants suffered a defeat. Now all opposition groups opposed to trade union, free trade and reciprocity began to band together. Imperialism and transcontinentalism went together with the protectionists of balanced growth in Montreal and Ontario. Then there was the CPR, which feared American competition, such as JJ Hill from Spokane, who built a railway line to British Columbia. The Canadian Manufacturers Association feared US dumping prices.
At that time, the Republicans came back to government in the United States and the reciprocity talks ended in the McKinley Tariff . Macdonald saw reciprocity as only a preliminary stage to annexation. The Conservatives won the election.
The Conservatives lost the 1896 election and Laurier's Liberals took over. It was supported by an economic boom. In addition, under the leadership of D'Alton McCarthy, the Imperial Federation League of Canada adopted Joseph Chamberlain's position . As the spokesman for New Imperialism in Canada, he had announced that economic ties with the United States would separate Canada from Great Britain.
The split within the conservative party did not come about for reasons of economic policy, but because the French Conservatives' dogma of infallibility, known as "les Blues" or "les Castors", was turned into demands that the state be subordinated to the Church in Canada . McCarthy and some of his colleagues from the Imperial Federation League , 'the Noble Thirteen ', on the other hand, called for some kind of Anglo-Saxon supremacy. The execution of Louis Riel deepened the division.
So Laurier came to government primarily through the free traders in the West. Therefore, he did not defend himself against Manitoba's discriminatory school laws. For him, free trade with the US was no question, but he managed to get the Imperial Federationists on his side. Canada would not be part of the Empire and would not divert men to the British fleet or army. But the pressure of the imperialists was stronger, which was shown in the Boer War . Volunteers poured into South Africa.
The provinces behind the three transcontinental railways, the expansion of which had been promoted by imperialism, also changed their policies. The Canadian Northern , a favorite of Manitoba's anti-CPR monopoly and supported by Toronto, and Québec's project, the Grand Trunk Pacific Railway , were driven by other motives, most notably anti-monopoly. In addition, the provinces felt set back, as the eastern ones hardly benefited from the CPR.
Canadian Pacific Railway
A railway was to be built from Moncton in New Brunswick, to Winnipeg and on to the west coast. The Grand Trunk Pacific Railway was to become a rival to the Great Western and Canadian Pacific Railway . In the elections of 1908 the Liberals achieved a sufficient majority. US and British capital poured in and the wheat economy was doing well. During this phase of self-confidence, Laurier relied on free trade with the USA.
The 1897 Canadian Tariff had given British goods a 25% lead over American goods. The average duty was 33%. The 1906 tariff offered lower tariffs to any country that lowered its tariffs. In 1910, negotiations between Taft and Laurier only concerned the question of which goods should be exempt from customs duties.
Henri Bourassa, editor of Le Devoir newspaper , Rouge spokesman on the school policy issue in Manitoba's school dispute, supported Laurier. But this discredited Laurier in English-speaking Canada. Clifford Sifton, Mackenzie and Mann, Manitoba, the Imperial Federationists, Van Horne of the CPR. and Bishop O'Fallon, who represented Irish Catholics in the French-speaking areas, opposed him. The Orange Order was back in circulation. Even the old Castors and the new Parti national only supported him as the lesser evil. The so-called Toronto Eighteen wanted to leave the party because they believed the new policy would set Canada's economy back and lead to political subordination to the US, if not to occupation. Laurier suffered a heavy defeat.
Main trends
Between 1871 and 1928, three trends dominated Canadian economic development: continentalization (railways, wheat exports), continued industrialization based on technologies of the late 19th century, and a resumption and intensification of the exploitation of soil and forest resources. Montreal expanded accordingly on the basis of coal and steel, railway construction and extensive agriculture; Ontario, also a steel and coal location, relied more heavily on electrical engineering and internal combustion engines. All provinces cut down their primeval forests, although the prairie provinces were naturally largely excluded from this. The east coast, however, experienced a decline in trade and industry.
Between about 1880 and 1913 investment in settlement and railroad construction accelerated and reached its peak in the wheat boom of the decade after the turn of the century. The export peaks were reached around 1920, followed by a peak in the wood and mining industries, as well as in the electrical and automotive industries.
To further integrate the expanding economies of the West and East, the government encouraged settlement, offering railroad companies land at low prices, with railroad lines doubling from 19,000 to 38,000 miles. The share of the prairie provinces in the gross domestic product rose from 5% (1890) to 20% (1929).
British investments made Montreal the capital of railroad construction, protective tariffs sealed off the industrial regions of Montreal and Ontario, and the timber industry in British Columbia was stimulated by the need for building materials for the prairie provinces. They had nothing to offer but wheat, which became the focus of Canada's integration policy.
The share of industrial output in employment fluctuated only marginally, around 18%, but it provided 24% of gross national income in 1890 and still 22% in 1929. Services, on the other hand, increased in employment from 11.1 between 1891 and 1931 to 18.9%, while their share in GNP fell from 15 to 11%. Agriculture absorbed 46.1% of the profitable labor force in 1891, but its share fell to 28.7% by 1931
Overall, improvements in the transportation system may have mitigated the Great Depression from 1873 to 1893 because the markets expanded and investment stimulated the regional economy. On the other hand, the railway boom from 1896 to 1910 was not followed by any significant impetus, because by 1920 the GNP fell, consumption options declined, and industry grew more slowly. This was due to the fact that this technology could not prevail in the long term against combustion engines, be it cars or aircraft. In addition, the competition between the regions increased. The East, which wanted to benefit most, ran railroad projects that made no economic sense, and many places tried by all means to be connected to these routes. Ottawa invested a total of $ 25 million and awarded 25 million acres of prairie land. Private companies did not build a single route on their own account.
Construction of the Grand Trunk Pacific began in 1905. The line was not connected to Montreal, but the Temiskaming and Northern Ontario Railway led to Toronto. There weren't even any tickets for the next route, so the price tripled. Both rail projects, both the Grand Trunk Pacific and the Canadian Northern, went bankrupt during the First World War. But the war required transportation, so the government bought all of the private lines and formed the Canadian National Railway .
The wheat boom, which began between 1896 and 1908, was fueled by the fact that in 1908 it was possible to develop resistant varieties of wheat that were adapted to the extreme climate, especially Marquis , a variety that replaced Red Fife, which had been released from Ukraine in 1842 had been brought. She fed Canada from about 1860 to 1900. 70% of the settler sites that existed in 1930 were only created between 1900 and 1915. In 1900 Canada had a share of 4% in world wheat trade, in 1914 it was 16%. Nevertheless, the share in the growth of the GNP fluctuated between 8 and 30%. The wheat boom, fueled by large amounts of capital linked to the railroad boom, ultimately slowed growth. As soon as there was no government subsidy or British capital, the boom collapsed.
The rapidly growing population of the prairie gave the regions greater political weight. In addition, Saskatchewan and Alberta achieved the rank of provinces. The prairie provinces pushed for lower tariffs, the abolition of the CPR monopoly, and share in the generally growing prosperity. In contrast, the east had become relatively independent of the wheat market, apart from a brief phase between 1875 and 1882, in which Ontario relied on wheat expansion for the last time. In addition, agriculture had shifted to cattle and pig production as well as cheese. The growth of the GNP in Canada has been mostly slow, around 3% per year. Between 1900 and 1910, however, it was twice as high, then fell again to an average of 2, rose again around 1925 by 1930 to 4, and after 1930 fell again to 1%.
With the outbreak of World War I, moratorium resolutions ensured that debts were deferred. In addition, the government arranged for 8 million dollars to be invested in seed grain to help farmers against the onset of dry years. The banks were instructed to make these loan needs a top priority. Two of the three transcontinental railways collapsed, and 41% of the settlers registered between 1870 and 1921 had to give up or sell their land to land speculators. The boom was politically intentional and served to keep Canada together, but it was not economically viable.
The increase in population in the growing cities and the slowly rising wages not only brought numerous new goods onto the market, but also new sales techniques. These included the mail-order catalogs, which were mainly used by Eaton's from 1869 to reach the emerging mass customers and to bundle supply streams. T. Eaton's company became the epitome of the catalog, but also made use of new media, such as the daily newspapers. Eaton's closed its doors in 2002.
Growing power of the provinces, world economic crisis
Oliver Mowat , Prime Minister of Ontario, was the most rigorous in pursuing policies geared towards the interests of the province, not those of Canada. Many Ontarians saw themselves as the dairy cow of Canada, so they blocked - against Québec - any form of cultural expansion of the French to the west and supported anti-French programs throughout the west.
In 1881, the federal government not only granted mining rights in the disputed area between Manitoba and Ontario since 1867, but also awarded the area to Manitoba. As a result, Ontario threatened secession. The dispute could not be finally settled until 1889, when the provincial borders were established in favor of Ontario.
Ontario passed a law protecting the public interest in streams, rivers and creeks in 1881, which was immediately cashed in by Ottawa. In the background, two investors quarreled who were able to mobilize the entire political leadership in Winnipeg and Ottawa in their own interest. Here, too, the Judicial Committee of the Privy Council had to be approached for clarification. It decided in favor of Ontario, and since then the provinces have control over all hydropower plants and the associated companies. In 1882, the Privy Council's Judiciary Committee made the provinces virtually sovereign in the areas of natural resources, property, civil rights, education, welfare, and health.
The legal situation was further complicated by the fact that, in the event of an emergency, many rights lay with Ottawa again. By 1930 the government no longer had any real tasks, such as the development of the prairies. The global economic crisis showed the instability of the overall system also on an economic level. Regional oligopolies in Montreal, Toronto, Winnipeg and Vancouver dominated the economy and often worked against each other and against Ottawa at the same time.
British Columbia had a small population and vast territory. The administration costs were correspondingly high, so that the province attracted the income from the sale of raw materials. If the prices were high enough, the province could be adequately supplied with government services; if they were too low, these services collapsed. In bad times, the province had to buy more expensive Canadian goods due to protective tariffs, but at the same time had to try to achieve acceptable prices on the world market. The region met the Crow's Nest Pass Agreement of 1897, through which the Canadian Pacific Railway had to charge less for trips to Montreal than to Vancouver. Land speculators and their political friends also increased corruption, especially since until 1902 a group of railroad industrialists, coal barons, large importers, loggers and salmon farmers supported the liberals. When the crisis hit the province in 1902, the conservative Richard McBride took office on strikes and accusations of reckless waste of resources. Economic initiatives were now demanded from the government, which focused on railroad construction. The Pacific Great Eastern was founded in 1912 (see British Columbia Railway ), the fish and timber industries recovered, and the Conservatives won a landslide victory in 1912. But they too did not escape accusations of clique formation, corruption, waste and the plundering of resources. There were also strikes and race riots, especially in Vancouver.
Since the federal government had practically no influence in the extractive industry, the province was much more exposed to the power elites. Unlimited timber licenses were granted until 1896, but this has now been banned, even though the railways and government had already received large grants . Now it was no longer sold, instead 21-year leases on 1,000-acre properties were offered for $ 100, or 5 cents per acre per year. 14,000 licenses had been sold by 1905. The land was given away so quickly that in 1907 the government intervened and established the Royal Commission on Timber and Forestry . She realized that harvesting could only take place in the allotted time if the corresponding forest was completely cleared. They tried to prevent this in the Forest Act of 1912. Even in the farthest foothills of the economic system, it became apparent that the decentralization of political power without decentralizing fiscal resources produced enormous problems that led to new decentralization tendencies.
Only the prairie provinces brought the resources into their hands. Income from taxes etc. was not decentralized until the 1950s, a step that was long shied away from. French-speaking Québecans always complained about the lack of large French companies in the province. Attempts were made to counteract this through education or business schools . Manitoba, on the other hand, had a local business elite in Winnipeg who had their own policies.
However, no other province has pursued such an explicit economic policy as Ontario. The province benefited from the protective tariffs of the federal government, won the mineral resources of the north in a race with Manitoba, and the development of the economy also allowed an early promotion of industrialization. At the same time, complaints about destructive timber licenses, especially on the Rainy River, increased massively. This was due to the fact that FH Clergue was American and an empire around Saute Ste. Marie had built on the basis of railroad lands, timber licenses and iron ore deposits on the north shore of the Upper Lake. In addition, the exporters of raw and processed products were bitterly opposed to each other. The latter enforced that raw wood could no longer be exported.
This mixture of lobbying and corruption only ended with increasing industrialization and the end of the raw material boom. Up until the 1930s, the government invested around a quarter of its revenues in the extractive industries, a share that fell below 5% in the 1930s. Instead, the province invested much more heavily in the hydroelectric industry, and many dam projects were carried out.
This became even clearer in the Power Bill of 1906, which was specifically intended to promote agriculture and industry. Under the leadership of Adam Beck from London in Ontario, then still called Berlin, industrial groups and provincial jurisdiction combined to secure a public monopoly for the distribution and production of electricity for the benefit of the region. The province consistently fended off Ottawa's attempt to build a canal and a dam system on the Ottawa River across Lake Nipissing to Lake Superior.
Internal combustion engines, electrical industry, communication technology
Cars and hydropower
In contrast to the railroad, the development of the automobile , apart from road construction, was driven by private initiative. From 1900 to 1905 81% of the investments in the transport sector were made for the railroad, from 1925 to 1930 only 46.7%. Instead, 41.1% was invested in automobiles and 11.3% in channels.
At the start of World War I, there were 32 Canadian auto companies. Many of them failed because of the high investment costs and were subject to overwhelming competition, such as General Motors . Also, Ford took over the company and founded in Ontario own production. Both recognized that this was the only way to trade cheaply within the tariff-encircled British Empire. Consequently, Canada exported more cars than it imported until well into the 1930s. A supplier industry emerged in the early 1920s. These companies soon supplied entire engines, axles, wheels and chassis. They used large amounts of rubber and metal, as well as numerous other raw materials.
The necessary energy could barely cover 100 km using high-voltage lines, especially since Canada could hardly use coal until the 1920s. The energy was neither suitable for export, apart from production on the border between New York and Ontario, nor was it sufficiently available to the industrial metropolitan areas.
This is how industrial plants were built where electricity was produced. On the one hand, this attracted the wood and pulp industry, which also found their second raw material, wood, there, and energy-intensive industries such as the aluminum industry, which benefited from low special tariffs.
Initially, however, the places of industrial and energy production were spatially separated. Above all, the raw materials industry, which could not simply relocate its extraction locations to the place of energy generation, benefited from the possibilities of energy transport through power lines. This was the case in the Sudbury Basin, where it was not possible to separate the ores without electricity.
Overall, the electricity industry has become a key area of the overall economy. In 1908 it was nationalized in Ontario. Even the railroad tried to profit from it, if only for lighting purposes and for the industries that depend on it. The drive technology hardly affected this, apart from electric trams.
Around 1900 a syndicate around Henry Pellatt tried to supply the Toronto-Hamilton region with electricity. Especially at the western end of Lake Ontario, communities united to prevent a monopoly of the Pellat Syndicate. In 1909 the Ontario Hydro Electric Power Commission took over the entire energy supply. In the 1930s, electricity production had already left steam behind, which, however, created new dependencies.
Agriculture, mining and forestry continued to fall, and actual industrial production also fell from 24% to 21%. In Ontario, however, their share rose from 24 to 28%, while in Québec it fell from 28 to 26%.
Newfoundland remained almost untouched by this development and even had to be placed under a commissioner in the 1930s after bankruptcy. The local market for industrial products was simply too small, and there were no financial institutions that could provide the large sums of money.
Industries in the far west were still entirely dependent on raw materials. The agricultural sector was still small, but its capital resources were greater. The fish and wood industries also benefited. Per capita income was 186% of the average Canadian income from 1910 to 1911, and even in 1920 to 1926 it was 121%.
The greater dependency on private capital in Québec resulted in turn from the industrial structure. Here people were more dependent on cheap labor in the textile industry and on the railroad industry. But the heavy industry as it was concentrated in Ontario was missing. While Ontario had developed together with the US Midwest, Québec had a stronger Canadian accent, which was reflected in the promotion of transcontinental railroad construction - with a focus on Montreal. Here the industry depended on the railroad and wheat boom, while Ontario concentrated on machines and engines.
Nevertheless, Québec urbanized between 1900 and 1930. Most of the immigrants were Catholic, brought children with them and were more distant from industrial society. In addition, they were now confronted with the English upper class, which had good contacts with the capital centers. So they learned that being Catholic and speaking French meant exclusion. The francophone elite resisted and achieved political supremacy. Economic intervention always meant social, if not “national” intervention.
First World War
Between 1907 and 1912, speculative land development projects in the Palliser Triangle in Saskatchewan and Alberta resulted in settlers in extremely arid areas. In 1913 there was an extreme drought. The government tried to help out with loans and credit moratoriums. But when World War I broke out, Canadian exports soared. A Federal Board of Grain Commissioners now ensured a further expansion of the farmland, for investments in machines, tractors and trucks that displaced horses and carts. After the war, the wheat board was abolished, prairie farming slowed its expansion, but state interventionism was resumed with the Great Depression. But this time prices weren't high because of the war, and extreme drought ruined many farmers.
In 1915 Great Britain also called for military equipment from Canada. An Imperial Munitions Board was set up to control production. In 1918, 40% of Canada's industrial production was arms and ammunition.
In 1916 the federal government imposed a tax on business profits, in 1917 an income war tax. Contrary to initial plans, it was not abolished. The government also bought Grand Trunk Pacific and Canadian Northern Railways. Rationing and price controls as well as war bonds were characteristic of the war economy , but the latter also showed that large amounts of capital could now be raised in Canada itself.
The financial market was also adapted to the war aims. For example, the Finance Act of 1914 meant that banks that issued more Dominion Notes no longer had to keep gold reserves available. The inflationary tendencies were accepted. This development led to the founding of the Bank of Canada in 1935 , which was supposed to provide better control.
The number of automobiles rose from 275,000 to 1.9 million from 1918 to 1929, and from 1917 to 1930 electricity production rose from 5.5 million kilowatt hours to 19.5. In contrast, wheat prices, which had been $ 2 a bushel in 1919, fell to fifty cents.
The tasks of the provinces, such as education, health, welfare and road construction, increased, while the income of the federal government rose in particular. In Québec, the urban population increased from 29 to 60 percent between 1891 and 1931, in Ontario from 35 to 63, and even in Nova Scotia from 19 to 47 percent. While they were increasingly deprived of rural mutual assistance, whether they liked it or not, they put a strain on urban aid systems.
In British Columbia the situation was completely different. The opening of the Panama Canal first opened the east coast to local products between 1914 and 1920. Wheat from Alberta was now cheaper to ship via Vancouver than via Montreal. Vancouver's population rose from 29,000 (1901) to 247,000 (1931). This made it the third largest city in the sparsely populated country.
Canada fell apart economically and threatened to drift apart politically. The progressives took on the interests of the prairie provinces, and they gained enough power at the federal level to prevent majority rule. The Maritime Rights Movement called for less federal power, and Québec became a stronghold of francophone separatism. But the global economic crisis changed this direction again.
Third national policy
The third national policy phase was heralded in 1944 by a white paper on work and income that the government had published along with a green book on welfare policy. In it she called for a free market economy in a Keynesian framework of balancing fiscal and monetary policy. In addition, there was an equalization of wealth through a progressive income tax and a corresponding social welfare system. It also called for free foreign trade and flexible exchange rates.
Overall, Canada was export-dependent and at the same time depended on foreign capital inflows. This was especially true for the economic core area Montreal-Toronto. The West, on the other hand, was increasingly integrated economically into the American Midwest. Simple Keynesian inferences, however, dominated the daily press and the public. They found their way into the politics of the Canadian government.
By the 1930s, the factors that increasingly integrated the islands into the Canadian economy had dominated. These were the transport routes, above all the rivers that flowed west-east, the railways that supported wheat export and settlement, the telegraph lines, plus the British structure of mentality and politics. Then there was the sheer size of the British Empire with its financial strength.
In Canada, the USA and Great Britain, exports fell first at the end of 1928, then imports, which did not follow until the end of 1929. In Canada, capital inflows didn't peak until 1930, a year or two after the onset of trade decline.
In the long run, it was the end of the railroad era, the withdrawal of overinvestment in this area, that is an important cause. Instruments of support and integration had to be modified under these circumstances. Urbanization and the decline of agriculture in favor of industrial production and services put people more exposed to the risks of an unprotected market. While it was easy to bring people to the country against the weakened resistance of the Indians, it was almost impossible without appropriate historical experience to ensure sustainable conditions in the rampant cities.
National income fell from $ 4.3 billion in 1929 to $ 2.3 billion in 1933. The decline was even greater in the formerly subsidized agricultural regions, where income plummeted from $ 600 million to $ 200 million between 1928 and 1932.
In Ontario and British Columbia, too, the slump in income was severe, while Québec and especially the east coast suffered less. They had benefited the least from the railway era and accordingly suffered the least from the collapse of this system of promoting national integration.
Canada was particularly vulnerable to the prices on the international raw materials market. The boom in forest and agricultural products, as well as that of metals, subsided. Canada had directed 24.6% of its public and private investment into this sector in 1929, even the USA only 18.7%.
The provinces were responsible for legislating health, education and welfare issues through the British North America Act (section 92 nos. 7 and 93). In Ontario, for example, the Workmen's Compensation Act was passed in 1914 , followed by pension laws for mothers in 1920, and pension laws in 1920, 1921 and 1927. Between 1871 and 1937 the province spent 14 million on social affairs, but 193 million between 1919 and 1937 alone.
As early as 1901, the Union of Canadian Municipalities for Municipal Ownership of Utilities carried out a campaign for localization. While such demands were rejected in Montreal as "water and gas socialism", boards of control were set up elsewhere with senior "city managers". The public institutions became, as it were, funding for private industry. While the government had long fought conglomerates, as in laws of 1889, 1910, and 1919, they were now massively promoted.
Long-term adjustment: the central bank
When the new policy was announced in 1944, the Bank of Canada was to be given short-term, anti-cyclical tasks on interest rates and price stability. Nevertheless, it was also given the task of ensuring a stable external value for the Canadian dollar.
The establishment represents a reaction to the end of the gold standard in the international payment system. Canada, like other war participants, gave up the gold cover. This allowed the money market to expand despite the outflow of gold. This increased stock of money made speculative expansion possible.
The pressure came from the prairie provinces, which pushed for an expansion of the money market. Actually, the central bank was supposed to do the same thing that the gold standard had done, namely to keep the currency of the dollar stable against its most important trading partners Great Britain and the USA. It succeeded, but the abandonment of countercyclical interventions led to centralization and lost its power as soon as the external threat ceased.
For the purpose of regional compensation, the system of the Per Capita Grant, which is prone to abuse, was switched to regional funding . The compensation payments between the regions (intergovernmental grants) and the central government rose from 4% in 1926 to 20% in 1929, 1933 and 1936. In addition, there was a complex system of support measures in the area of low wages and disadvantaged groups. This gave rise to the post-war social system.
According to the Keynesians, underconsumption had exacerbated the crisis in the short term, if not caused in the long term. Lower consumption diminished the investment required, which in turn dropped incomes. Interest rate cuts were thought of to encourage investment. In addition, more investments were required from the state. As soon as consumption picked up again, production would rise again.
On the other hand, there were arguments that short-term government intervention would only delay necessary adjustments in the long term and ultimately make things worse. However, these monetarist views did not prevail, especially since they were only aimed at short-term effects.
Reactions of the provinces to the world economic crisis
Prime Minister Pattullo copied the New Deal in British Columbia and wanted to "socialize credit", run welfare programs apart from health care, which was only nationalized at the federal level in the 1960s. In 1934 he tried to set up a national unemployment insurance scheme at the head of the western provinces, and demanded that the provinces have access to income tax and the “rational use of national credit”. But the other prime ministers didn't go along with them, so he pushed through a Special Powers Act that gave the Victoria assembly the same rights as the Ottawa assembly. When Ottawa called for austerity after the 1935 elections, Pattullo threatened to split off British Columbia.
At the same time, the Maritime Rights Movement on the east coast demanded the rights that had been rejected in 1926. In 1934 the Nova Scotia Royal Commission of Economic Inquiry requested the same aid for the east coast as it had for the prairie provinces. Eventually this led to the more ambitious Royal Commission on Dominion Provincial Relations from 1937 to 1939, which resulted in the "Third National Policy".
But neither Ontario under Mitchell Hepburn , who could not work with Premier King and who feared higher taxes for his province, nor Québec under Maurice Duplessis , who played with separatism for the first time, worked with the commission. But Alberta, which felt that it had been badly treated, also withdrew from the deliberations.
Consequently, the commission came into the hands of a federal, Anglophone service elite. These Ottawa Men followed John Maynard Keynes . They were instrumental in the "Third National Policy". Protective tariffs, mutual undercutting of standards and prices, and devaluations became the rule. The Canadians tried to expand their trade, especially with Great Britain. US President Hoover , however, offered cheap agricultural tariffs against electricity supplies. Great Britain agreed tariff cuts through the Imperial Trade Conference .
With the election of the Democrats in the USA, the southern neighbor focused on expansion. As a result, the two North American neighbors agreed to intensify free trade among themselves in 1935 and wanted to benefit each other in the future. The economic continentalization thus prevailed.
Second World War
Preparations for war in 1938 called for a reduction in tariffs between Great Britain and the United States. Canada pushed through concessions from both trading partners. The war began for Canada and Great Britain as early as 1939, but a defense alliance was agreed with the United States in 1940/41. The continentalization was thereby strongly promoted.
In addition, the centralization efforts of the political leaders in Ottawa now had free rein because, as the Judicial Committee of the Privy Council had determined, the government had absolute power during a war or insurrection, an invasion or an emergency.
The first effect of the war was that the Depression was overcome immediately and the economy grew strongly: employment rose by 12%, industrial production doubled. As a result, the share of Canada's GNP contributed by Ontario rose by 3.5%, that of Québec and Saskatchewan fell by 2.5 and 3% respectively
At the same time, expenditures increased tenfold from $ 500 million to $ 5 billion, and tax revenues rose from half a billion to two and a half billion. Taxes and duties fell from 65% of total revenue to 18%, and income tax rose from 21% to 45%. The number of those employed in the federal service rose from 45,000 to 115,000. Price and wage controls, rationing and numerous labor regulations characterized the war economy.
In 1939, the Royal Commission on Dominion-Provincial Relations recommended that all income taxes go to the federal government - the provinces should become districts in a single state - and that the government in return take care of unemployment. In 1943, Leonard Marsh recommended that the government take responsibility for health, pensions and children, tasks that were previously the province of the province. The Third National Policy incorporated both the Commission's recommendations and Marsh's. But the provinces resisted. Québec feared for its different social character, for language and religion. The Bank of Canada also resisted Keynesian monetary policy.
The role of the USA
But with these objective forces, the factor of values cannot be ignored. Canada cultivated and increased its self-confidence and also invested in the mass media, such as the CBC, promoted Canadian literature and historical research, and brought the archives of the Hudson's Bay Company from London to Canada. Canadians viewed themselves as a community of common sense and Americans as individualists or egoists. Tolerance should temper the unifying spirit of egalitarian democracy. The protagonist of this philosophy was Thomas D'Arcy McGee , one of the fathers of the Confederation .
The Canada First movement was also brought in to help overcome the divisions. But their impact hardly extended beyond Ontario.
The Bank of Canada refused to respond to the economic crisis of the late 1950s by adjusting interest rates. It stuck to a 4% inflation rate. She believed that the cause was not a lack of demand, which could have been responded to by cutting interest rates, but rather the imbalances caused by continentalization. There was no success, the head of the central bank had to leave. Nevertheless, the central bank remained under the direction of the government, which relied on expanding the money supply. As a result, the dollar fell in value, which helped exports as the US economy recovered. This, however, had attributed its economic recovery to tax cuts according to Keynes' apprenticeship, which experienced an initial high phase.
Both the US and UK abandoned Keynesian fiscal and monetary policies, Canada followed suit. At the beginning of the 1970s, price and wage controls seemed to be the ideal solution. In 1975, the head of the Bank of Canada took an explicitly monetarist, anti-inflationary stance in the so-called Saskatoon Manifesto . Short-term successes were undone by 1980 at the latest by a double-digit inflation rate and an unemployment rate of almost 10%. The oil price hikes of the 1970s had a strong impact, and Ontario and Québec experienced a long period of de-industrialization as a result, although the computer industry also created new jobs.
The Atlantic coast initially benefited from the expansion of the three-mile zone to 200 miles offshore. The fish caught there was now better marketed and mostly migrated to the USA. Fish factories and new trawlers increased sales. Ontario, on the other hand, benefited from the separatist tendencies in Québec. Numerous companies migrated from there and settled around Toronto.
The Cold War was dominated by the systemic conflict between its leading powers, the USA and the Soviet Union , while the European colonial empires dissolved. Continental trading blocs emerged in Europe, in Eastern Europe and North Asia, in Latin America, North America. Cars and air traffic - the latter in the hands of the government as Trans-Canada Air Lines - dominated the economic expansion, the basis was electrical energy for industrial production, oil derivatives for propulsion.
The late phase of the Cold War was characterized by computerization and satellite communication, but also by the incipient industrialization of the western Pacific regions of Asia. The previously valid financial system was abandoned, including the gold standard.
The US was able to maintain its technical lead, but the lead shrank after 1970. Multinational corporations dominated the world economy and interfered heavily in politics. As early as 1970, these “multies” exported 62% of US goods and imported 30%. Globally, tariffs had fallen from an average of 25 to 5%, but other barriers were being put in place, including quotas, new tariffs, bureaucratic procedures, standards, market regulations, public partnerships, subsidies, etc. Contributing to this were the numerous crises from the Korean conflict to the collapse of the as Eastern bloc designated economic group significantly.
While the dominance of the USA in the military sector was clear by 1990 at the latest, economic competition grew. The share of transnational trade in world trade doubled from 12 to 24% between 1953 and 1980 alone. In addition, raw materials that had not yet been exploited were increasingly located in countries that were trying to evade US dominance. This was especially true for the most important energy suppliers. Private companies had dominated this market until 1955, but now the oil states themselves acted as traders. By 1985 they had increased their share from almost 0 to 55%. The dollar could hardly be stabilized against the euro and petrodollars, and so one devalued. Bretton Woods was abandoned.
At the same time, the capital market expanded and accelerated. At the end of the 1980s, the daily volume of the currency markets corresponded to the GDP of the whole of Canada - for a whole year.
The USA, which was the world supplier of industrial goods until 1970, increasingly turned into a service provider, while industries emigrated to Asia, Latin America and Europe. The United States experienced its first post-war recession from 1957 to 1962 in which attempts were made to limit the outflow of capital. Despite a deficit, Kennedy lowered taxes in 1963. The following growth period pushed the unemployment rate below 4%, driven by more receptive markets and wars.
But in 1971 the US experienced its first negative trade balance since 1896. The dollar fell and inflation rose, also to finance the Vietnam War . There were also the first oil crises. At the same time, the population structure changed. The “pill” reduced the number of children, the economic pressure allowed both parents to work, which initially increased the unemployment rate.
When the oil price fell in 1982 and the FED decided to reduce inflation by sharply reducing the money supply, the US experienced a severe economic crisis. Interest rates rose, the deindustrialization and stagflation of the 1970s accelerated, the unemployment rate rose to over 10%. For the first time, deregulation , privatization and denationalization became key objectives. The Nixonomics were considered obsolete.
From 1983 to 1988 there was another boom, unemployment fell to 5% and the inflation rate to around 4%. The GNP now depended 22% on world trade, compared to 10% in 1963. The US became the world's largest debtor after being the main lender until then. Japan had replaced them in this.
Postwar Canada
In the twenty years after 1951, the population of Canada grew from 14 to 21.5 million, at the same time the GNP quadrupled from 21 to 84.5 billion dollars, and real income tripled.
The railway era ended. The Trans-Canada Highway from Halifax and St. John's to Victoria was built between 1948 and 1952, and Trans-Canada Air Lines , a state-owned company, began operating from coast to coast in 1939. Trans Canada and Canadian Pacific merged, local carriers supplied the Atlantic provinces, Québec, the Prairie Provinces and the Northwest Territories. In 1951 the railways had 70 million passenger kilometers, in 1959 it was only 60. In 1951 the airlines carried it to over 700 million passenger kilometers, in 1959 it was already over 3 billion. While 2.6 million cars were registered in 1950, their share doubled by 1959.
Oil discoveries in Alberta and Saskatchewan increased oil production tenfold from 46.7 million to 455 million barrels in the years 1951 to 1970. They brought export revenues of 500 million dollars, mainly from the USA. Natural gas rose from $ 104 million in 1961 to $ 350 million in 1970. The situation was similar with other mineral resources. The US dominated exports, capital supply and technology.
After the war, the returnees were astonishingly quick to integrate into the labor market. The workers fought to improve working conditions, as in the asbestos mines of Québec, where they went on strike from April to June 1949, causing serious rioting, lockouts and the use of strikebreakers. Only the Winnipeg general strike in 1919 received more attention.
John Diefenbaker's Conservatives promised development initiatives for the West and the East in 1957/58. But the oil policy split the country along the Ottawa Valley. Ontario received a petrochemical industry in Sarnia , while from Montreal eastward, dependence on transatlantic oil continued. The Pacific and Atlantic coastal provinces in particular suffered from the crisis in the USA.
The recovery from 1963 to 1968 was already largely dependent on developments in the USA. Canada let the dollar trade freely, and it initially fell. The Auto Pact created a common auto industry region so that Canada benefited from the auto boom.
A report on foreign direct investment raised old fears of a US invasion. This is how the Federal Government's Foreign Investment Review Board came into being in 1973 . From 1970, efforts were made by a Department of Regional Economic Expansion to compensate for the regional differences. The contrast between continentalization and regionalization could not be eliminated, however, but actually forms a foundation of the Canadian economy.
The regions
British Columbia
British Columbia's export region was Asia and the USA, but it bought its goods in Canada. Its raw materials, especially wood, went to the south and west, its finished goods came from the east. Vancouver became a trading hub for wheat from the prairies to Saskatchewan. Since the 1950s, with the completion of the Trans Mountain Pipeline, oil came to Vancouver, which was mainly in demand in California. The same applied to sulfur, so that the economic ties between the West and the East and Europe were loosened.
In 1962, half of the prairies' grain exports left Canada via Vancouver. In fact, it had become cheaper to send wheat to Europe via Vancouver than via the ports of the East.
The prairie provinces
Alberta, however, tied more closely to the USA. Its oil pipeline reached the Manitoba-Dakota border in 1949, ran south of Lake Superior and reached Sarnia, Ontario in 1953. In 1958, the Trans Canada pipeline for natural gas, which bypassed Lake Superior northward, reached Toronto and Montreal. But its importance was comparatively minor. When US groups pressed for Alberta oil supplies to be cut during the 1957-1962 crisis, Canada initiated the National Oil Policy .
Manitoba participated only marginally in continentalization. At best, wood products such as paper and pulp played a role here, apart from nickel, two-thirds of which went to Great Britain. Winnipeg was shrinking more than Alberta's and Saskatchewan's metropolises.
Ontario and Quebec
Montreal fell behind against Toronto, which built its own commercial and financial structure. Since the 1950s, ships from the Atlantic could reach the capital of Ontario bypassing Montreal. The power supply also made itself more independent of Québec. The decline of Thunder Bay as the eastern hub of transatlantic trade rounds off the picture of an economy of Canada that is geared towards the USA, which is itself economically divided.
The industrial center of today's Canada lies in the Oshawa-Sarnia tangent and in the Golden Horse Shoe, the former is oriented towards Detroit and Chicago, the latter towards the New York area. Toronto and its satellite cities were in the center, Montreal, the commercial metropolis, did not form a system of satellite cities. But the headquarters of the Canadian Pacific Railway, the Canadian National Railway, Air Canada , Bell Canada and the Bank of Montreal were located. They were transcontinental institutions of the 19th century.
East coast
The east coast remained relatively isolated after the war, even though living conditions approached those of the rest of the country.
Politics and institutional disintegration
Initially, the Third National Policy achieved an increased degree of centralization, but by 1970 the provinces took back the initiative more strongly. Much like between 1880 and 1920 under the aegis of the Judicial Committee of the Privy Council , the forces of disintegration were strengthened.
British Columbia hosted WAC Bennett's Social Credit Party from 1952 through the late 1970s . It brought the power supply under the control of the province (Columbia Power Authority) in the wake of McBride and Pattullo and used electricity as a means of development policy. The Pacific Great Eastern Railway was expanded into the Peace River District and was used to transport raw materials. In 1961, the province signed a contract with Oregon to build dams on the Columbia River . Even if the federal government was involved, as in the USA, the regional authorities steered the process.
In Alberta , Ernest Manning's Social Credit Party succumbed to the combined forces of Ottawa and Washington in the exploitation of oil and gas. This was mainly made possible by the increased demand caused by the Korean War .
Saskatchewan was ruled by the rather social democratic Co-operative Commonwealth Federation , which took over the government shortly before the end of the war. By 1946 the government initiated brick and shoe factories, a fish processing industry, boards for marketing, wood and furs, and a bus company. It was later joined by an airline, a crown monopoly on telephone services, the Inter Provincial Steel Corporation , a car insurance company, and the Saskatchewan Power Corporation . They were not all successful, but the province dominated the economy.
Even Manitoba, which was oriented more eastward and less southward, established a five-person Development Authority in 1964 to initiate and control economic initiatives.
Ontario was divided into thirty planning districts in 1946. Their development should be coordinated with that of the other. Above all, industry should be encouraged, but also the immigration of mainly British entrepreneurs, investors and trained workers.
Québec, on the other hand, massively opposed the drive to centralize the Third National Policy, because the French Canadians saw themselves threatened by the Anglophone majority. Only under Jean Lesage did the Quiet Revolution take place . A hydropower commission was set up in the 1940s to ensure that all electricity generators and the distribution of electricity belonged to the province. Also a steel and iron complex ( Sidérurie d'État du Québec ), a mining company, Société Québecois d'Exploration Minière , and an oil company, Société Québecoise d'Initiatives Pétrolière . In 1968 René Lévesque was leader of the Parti Québécois , which wanted the province to be independent.
Eastern Canada responded to the demands of the Third National Policy through a Royal Commission on Provincial Development and Rehabilitation . She did not believe in transfer payments, but suggested redistributions in industrial activity. In 1954 the Atlantic Provinces Economic Council was formed as a voluntary planning group. This emergence of the provincial group culminated in the formation of the Department of Regional Economic Expansion in 1969 and the Atlantic Provinces Royal Commission on Maritime Union the following year .
The weakening of the federal government
As early as the end of the 1950s, the head of the Bank of Canada believed that a compensatory monetary policy was not appropriate for an open, regionalized economy. From then on, the bank concentrated on stabilizing the currency, especially with a view to the US dollar. In any case, the reality was that the federal government gradually lost its centralization powers after the end of the war. It had no jurisdiction over health, education, or welfare. There was no means of transferring these powers to Ottawa, because no process was planned that would have made possible the constitutional changes that would have been necessary. The provinces now invested more in administration and control than the federal government, which in 1952 was still responsible for 63% of all government spending. In 1965 this proportion was only 47%, but the federal government still claimed the lion's share of tax revenue.
Now Ottawa tried with cash inflows that were tied to conditions to indirectly enforce its policy. The proportion of provincial expenditure financed by Ottawa rose from 9.75% in 1956 to just under 27% in 1960. The co-financing of medical expenses (50%) increased this proportion further.
Québec resisted these guidelines, which were perceived as interference. It blocked a federal education, welfare and health program. As early as 1951–52, Ottawa paid unconditionally. In 1960 Québec left the country anyway, wanted to take over the costs and administration itself, but demanded a higher share of the provincial income taxes.
The first decade of oil
The increases in the price of oil brought a new boom to the prairie provinces. In 1970 Ontario contributed 35% to GDP, Alberta 8%. In 1980 it was only 30% from Ontario, but 14% from Alberta. The situation was similar in terms of investments, but above all in terms of population. While Canada's population increased by 12% from 1971 to 1981, that of Alberta increased by 38 and that of British Columbia by 28%.
The share of investments in the oil industry was hardly inferior to the former railway investment. Around 2.5 and 2.4% of the GNP were invested in oil and railway construction (from 1849 to 1859). Once it was the Grand Trunk Railway and the Grand Trunk Pacific Railway, it was Dome Petroleum and Petro-Canada in the 1970s . This gave the federal government access to the provinces again.
The oil shortages that resulted in the Bank of Canada trying to fight inflation led to the collapse of two Canadian banks, the Canadian Commercial Bank and Northland Bank . However, this was also due to the fact that the provinces promoted their banks, new institutes were established and the "light" oil money led to a rapid prosperity of Western banks.
The basic idea of the oil economy was self-sufficiency. It was hoped to keep incomes low in the west and prices in the east. High export tariffs generated market gains from the west, while oil purchases east of the National Oil Policy Line were subsidized. Since it was assumed that world oil supplies would run out in a short time, which would be accompanied by enormous price increases - which did not occur for the first time until 2007 - investments were made increasingly in exploration in the Arctic region and off the east coast.
Investments in Alberta's difficult-to-develop oil shale turned out to be overpriced, with prices falling instead of rising. In the 80s the fish populations collapsed in the east, as did the salmon populations in the west at the end of the century.
Turning to the US economy
For the first time in 1969 - apart from a few years - Canada was able to export more raw materials to the USA than it imported. From 1764 to 1913 Canada was only able to offset its negative trade balance with the US through British capital inflows.
Between 1983 and 1993, direct investment in Canada fell from 35% to 25%. In 1967 the USA still had a share of 80%, by 1992 this had fallen to 64%. In 1967, 8% of foreign investment came from Great Britain and from Japan 12%. By 1992 the UK share rose to 13 and the Japanese share to 9%, but other European countries now reached 10% - the remaining 4% was spread across the rest of the world.
The government shifted its activities away from the provinces to interstate ones. At the same time, deregulation and lean government in Canada increasingly meant federal, not provincial, government. Meanwhile, US policy became more and more free-trade verbally, but also more and more clearly protected its industries by other means.
This was extremely threatening for Canada because it was 30 to 40% dependent on foreign trade, of which around 70% was with the USA. In early 1989, the first steps towards a free trade agreement with the USA began, taxes were reduced, but most importantly an arbitration process was implemented, which allowed Canada to interfere in informal trade restrictions. Canada could try to develop a common management and restructuring strategy. The nationally oriented policies of 1876, 1896 and 1945 were obsolete.
In 1994 the Canadian government signed the North American Free Trade Agreement (NAFTA), which it concluded with the United States and Mexico . In the next few years, the Canadian export industry benefited from the agreement, but the timber industry, for example, was threatened with a reduction to raw wood exports instead of processed products. Canada also increasingly supplied electricity to the south, some of which was generated at high ecological costs, without using domestic industry.
Second world economic crisis
In British Columbia, a trade deficit was already evident in 2006, similar to the industrial conurbations of Ontario and Québec, which imported more than exported from around 2003. There was a close connection to the exchange rate between the Canadian and US dollars, because the Canadian dollar was steadily increasing in value. Only the prairie provinces had a clear export surplus, but this was mainly based on the export of oil. Behind this was also the intention of the US to reduce the proportion of oil from the Middle East. On the other hand, the Atlantic provinces were able to increase their surplus considerably, even if they are only of minor importance to the economy as a whole.
In contrast to the USA, where the so-called subprime crisis hit real estate and credit companies in the summer of 2007 , Canada's real estate market and the banking industry were initially less vulnerable. However, since the export economy depends on the US economy, the Bank of Canada lowered the key rate from 2.25 to 1.5%. Nevertheless, she expects the economy to decline by 1.2% in 2009. On March 3, 2009, it lowered the key rate to 0.5%.
In 2007 the price of oil had risen to around 150 US dollars per barrel. Like all commodity countries, Canada initially benefited from the enormous revenues, but the country was hit all the harder by the collapse in prices, which caused the barrel price to plummet to around $ 35. Numerous projects, such as the mining of the tar sands in Alberta's Athabasca area, have been stopped. In the fourth quarter of 2008, Canada's exports fell by 17.5%.
Turnover on the Toronto Stock Exchange soared, and prices for commodity companies fell sharply, as did those of banks. The real estate market was reached next. House building permits fell in October 2008 by 15.7% compared to the previous month, and construction starts in November by 18.8%. In addition, tourism suffered from the weak US dollar in 2007.
The labor market was only slightly affected at the end of 2008, the unemployment rate rose to 6.6%. But it rose to 7.2 in January 2009, in February to 7.7, in March to 8.0 and in August to 8.7%, with Saskatchewan only 4.1% in January and Newfoundland 14.3% . Ontario lost 35,000 full-time jobs in February and Alberta 24,000 full-time jobs. By November 2009 the rate fell slightly to 8.5%.
See also
- History of Alberta
- History of British Columbia
- Ontario history
- History of Québec
- Garbage conflict between the Philippines and Canada
literature
- Richard Cole Harris: The Seigneurial System in Early Canada. Les Presses de l'Université Laval, Québec 1968.
- Robert Armstrong: Structure and Change: an Economic History of Quebec. Gage 1984.
- John McCallum: Unequal Beginnings: Agriculture and Economic Development in Quebec and Ontario. University of Toronto Press, Toronto 1980.
- Jean Barman: The West beyond the West. University of Toronto Press, Toronto 1991, ISBN 978-0-8020-7185-9 .
- Kenneth Buckley: Capital Formation in Canada, 1896-1930. Toronto 1974.
- John F. Due: The Intercity Railway Industry in Canada. Toronto 1966.
- Albert Faucher: Le charactère continental de l'industrialisation au Québec. In: Ders: Histoire économique et unité Canadienne , Fides, Montréal 1970. ( PDF 268 kB )
- Michael Bordo / Angela Redish: The Rationale for the Founding of the Bank of Canada , in: Journal of Economic History 47 (1987) 405-413.
- Pedro S. Amarala, James C. MacGee: The Great Depression in Canada and the United States: A Neoclassical Perspective. In: Review of Economic Dynamics 5.1 (2002), pp. 45-72.
- Robin F. Neill: A History of Canadian Economic Thought. London / New York 1991.
- Kenneth Norrie, Douglas Owram: A History of the Canadian Economy. 2nd edition 1996.
- MH Watkins, H. Grant: Canadian Economic History. 1994, ISBN 978-0-88629-181-5 .
- John NH Britton: Canada and the Global Economy. The Geography of Structural and Technological Change. Toronto 1996 ISBN 978-0-7735-1356-3 .
- C. Grant Head: Eighteenth Century Newfoundland. Toronto 1976.
- Allan Greer: Peasant, Lord, and Merchant. Rural Society in Three Quebec Parishes 1740-1840. Toronto 1985.
- Adam Shortt: Adam Shortt's History of Canadian Currency and Banking: 1600-1880. Toronto 1986.
- Richard Pomfret: The Economic Development of Canada. Toronto 1981.
- Allan G. Green: Regional Aspects of Canada's Economic Growth. University of Toronto Press, Toronto 1971.
Web links
- Robin Neill: Canadian Economic History . University of Prince Edward Island website
- Bank of Canada website on the financial system
- Economic History of Canada . In: Quebec History , 1948
- The economic history of Canada . In: World History Archives , Hartford Web Publishing
- James Powell: A History of the Canadian Dollar . on the Bank of Canada website
- Route maps of the Canadian railways
References and comments
- ↑ The article follows mainly Robin Neill: Canadian Economic History (see web links).
- ↑ In Toronto the only surviving toll-collector's house (tollkeepers' cottage) has been restored. Depending on the vehicle, 1 to 6 pence were due at the toll booths .
- ^ C. Grant Head: Eighteenth Century Newfoundland , Toronto 1976, p. 211
- ^ William J. Eccles: Canada under Louis XIV, 1663-1701 , London 1964, p. 101 f.
- ↑ Allan Greer: Peasant, Lord, and Merchant. Rural Society in Three Quebec Parishes 1740-1840 , Toronto 1985, p. 92
- ↑ Louise Dechêne: William Price 1810-1850 , Thèse de License ès Lettres (histoire), Université Laval 1964
- ↑ History of the Banking system of Canada [to 1948], in: L'Encyclopédie de l'histoire du Québec / The Quebec History Encyclopedia
- ^ Gordon Hak: Turning Trees into Dollars: The British Columbia Coastal Lumber Industry, 1858-1913 , Toronto: University of Toronto Press 2000
- ^ Adam Shortt :, Adam Shortt's History of Canadian Currency and Banking: 1600-1880 , Toronto 1986, p. 297
- ^ Richard Pomfret: The Economic Development of Canada , Toronto 1981, p. 126
- ^ Richard Pomfret: The Economic Development of Canada , Toronto 1981, p. 124 f.
- ^ Allan G. Green: Regional Aspects of Canada's Economic Growth , University of Toronto Press, Toronto 1971, pp. 87-89
- ↑ From a single seed Tracing the Marquis wheat success story in Canada to its roots in the Ukraine , Agriculture and Agri-Food Canada
- ^ Gordon W. Bertram: The Relevance of the Wheat Boom in Canadian Economic Growth , in: Canadian Journal of Economics 6 (1973), pp. 545-566
- ^ Merrill Denison: The People's Power, The History of Ontario Hydro. McClelland and Stewart Limited 1960.
- ↑ On the different cost of living: JC Herbert Emery: Wages & Prices. Cost of Living in Fourteen Canadian Cities, 1900 to 1950, University of Calgary Economic and Social History Database and Journal 1.1 (2004) 1-12
- ↑ On this, Documents sur la grève de l'amiante de 1949 / Documents on the 1949 asbestos strike, in: Quebec History, 2001
- ↑ Relevant here are HK Ralston: Patterns of Trade and Investment on the Pacific Coast , in: BC Studies 1 (Winter 1968/69), pp. 37–45 and JMS Careless: The Lowe Brothers, 1852–1870: A Study in Business Relations on the North Pacific Coast , in: BC Studies 1 (Summer 1969) 1-18.
- ↑ With some delay, the import and export figures appear on the Industry Canada website , which can be compiled according to various criteria.
- ↑ Canada is entering a recession, decides Bank of Canada, in: The Vancouver Sun, December 9, 2008 ( Memento of the original of April 6, 2009 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Federal plans will add $ 50B to debt: Think-tank, in: The Vancouver Sun, January 21, 2009 ( Memento of April 13, 2009 in the Internet Archive )
- ↑ 2009 Article IV Mission to Canada, Concluding Statement , International Monetary Fund, March 11, 2009
- ↑ 2009 Article IV Mission to Canada, Concluding Statement , International Monetary Fund, March 11, 2009
- ^ Statistics Canada: Building permits. October 2008 and Economic indicators, by province and territory (monthly and quarterly) ( Memento from September 25, 2011 in the Internet Archive )
- ^ Government of Canada. Canadian Economy Online ( Memento of February 27, 2009 in the Internet Archive )
- ↑ A table with the provinces can be found in the article Canada lost 129,000 jobs in January : StatsCan, CBC News February 6, 2009 , archive.org, April 18, 2009
