Chapter 9. Economic Transformation and Continuity, 1818–1860s
9.11 Summary
By the 1840s industrial capitalists in Britain and the United States were a force with which to be reckoned. Along with their merchant and investment allies, they demanded a liberation of trade, an elimination of tariffs, and an opening of new markets, whether the markets and suppliers in question wanted it or not. For British North America, this meant an end to automatic support from Britain, a reduction in imperial governmental investment, loss of protected markets, and an opportunity to pursue new challenges.
Across Canada and the Maritimes the economic response was both entrepreneurial and innovative, and also sluggish and conventional. The establishment of financial institutions and embryonic industries helped transition the economy into a new capitalist stage of production. At the same time, staple industries remained at the core of the economy for years to come.
Key Terms
backward linkages: Economic inputs (often infrastructure) that support the production of the principal staple. In the case of the fur trade, backward linkages include warehouses, docks, and fur trade posts. In the case of the wheat economy, the linkages include silos, means of transporting grain, seed, and farm implements. Compare with forward linkages.
capital, capitalism, capitalists: Capital is the portable wealth that can be applied to the economy in the form of investment. Prior to capitalism, wealth was manifested almost entirely in land and agricultural production. Investment was, in effect, reinvestment of output. Outsiders did not generally invest their wealth in the farms of others, certainly not in the pre-modern, feudal era. The mercantile era created a merchant class with excess capital (money, wealth), which was stored, invested, and made available for borrowing for investment. Capitalism is the system in which the means of production (farms, factories, etc.) are privately owned and capable of being bought and sold. It generally depends on wage labour. Capitalism is, too, a system of social relations based on the right of the individual to move capital to wherever it will generate the greatest benefits. A capitalist is someone who works within the capitalist system, whose wealth is based not on inherited and immovable property but on the ability to move wealth from one investment to another.
Civil War: The war between the southern and northern American states from 1861 to 1865. Seven southern slave states seceded from the Union and formed the Confederate States of America. The continuance of slavery and “states’ rights” were the key catalysts to the crisis. The number of war dead totalled more than 100,000, and at the end of the war the United States had the largest standing army on Earth.
coffin ships: Lumber boats that carried immigrants from Ireland to Canada in the 1830s. Many died during this trip as hygiene and overcrowded conditions aboard the boats were atrocious.
Corn Laws: Regulations governing the import and export of grain in Britain. A system of tariffs that benefited colonial and domestic producers and disadvantaged foreign producers in the British marketplace.
Crimean War: A multinational conflict centred on the Crimean Peninsula and the city of Sevastopol on the Black Sea. The war pitted Britain, France, and Turkey (the Ottoman Empire) against Russia. Noteworthy are the magnitude of deaths (roughly half a million) and the beginnings of the military field hospital (under Florence Nightingale), which produced important innovations in battlefield medicine.
cullers: Codfish buyers in Newfoundland ports, especially St. John’s.
democracy: A form of government translated roughly from its Greek roots as “rule by the people.” The complicating factor is that “the people” is a slippery concept that is historically contextualized, and the extent of “rule” is also negotiable. Democracy was long associated with cities and towns, but not with nation states or empires, over which monarchies and oligarchies ruled. The emergence of representative democracy at a national level in the late 18th century — first in the United States, then in France — constituted a revolutionary change in organizing “the people’s” voice. In British North America, legislative assemblies might be elected but they did not rule, not until the 1840s. The majority of adults were “enfranchised” or legally able to participate in a democratic election only in the 20th century. It is still the case, of course, that people under the age of 18 years are not able to participate in democracy, so the vote is not “universal” by any stretch.
Empire of the St. Lawrence: A phrase coined by historian Donald Creighton in the 1930s, it refers to the economic and political influence of Quebec and Montreal merchants and colonial governments over a region that extended, at its peak, across the whole of North America to the Pacific Ocean.
extended family: Generally refers to three generations or more of one family. Another form, the consanguineal family, includes adult siblings.
forward linkages: Secondary developments in an economy arising from the production of a staple or other goods. For example, while cotton requires backward linkages like farm equipment, a labour force (possibly a slave trade), and warehouses, it might generate forward linkages like cotton mills and a textile industry. Lumber — a classic Canadian staple — requires many backward linkages but it can feed into the development of mills, the paper sector, furniture making, and so on.
free labour: Working people who are free of feudal or other similar bonds.
Grand Trunk Railway: A rail system that linked Canada West (Ontario) and Canada East (Quebec) in the 1850s. It was extended through spur lines and the purchase of other railways to Portland, Maine.
industrial revolution: A transition in systems of production associated with the rise of machine-assisted labour, non-organic sources of energy (water power, steam power, electricity), and large manufacturing and mining settings. Occurred first in the British Isles beginning in the late 18th century, spreading to most countries in the North Atlantic by the mid-19th century. Is “revolutionary” in that it supplanted older systems of production and the social relations on which they were based. It also changed the focus of Western economies from agricultural and craft production to industrial production of (mainly) textiles, metal products, and energy.
Irish Potato Famine: A four-year famine (1845-1849) in Ireland brought on by the heavy reliance on potatoes as a core element of the diet. When blight (a plant disease that affects potatoes) struck, food stocks were quickly exhausted. During this famine, perhaps as many as 2 million Irish emigrated, mostly to the United States but also to British North America, Australia, and elsewhere.
Lachine Canal: The canal built at the rapids at Lachine; first attempted in 1689 but it wasn’t until 1825 that a functioning system of locks was in place. The name, Lachine, references French hopes of a waterway across North America to China (la Chine). Lachine confirmed Montreal’s position as a leading port in and out of the interior of North America and Lachine itself became an important focus of industrial growth in the mid-19th century.
laissez-faire: A philosophy and/or system of policies that minimizes government management of the economy. In practical terms it means elimination of tariff barriers, duties, taxes, and regulations beyond the minimum required to protect property.
Massey, Massey-Harris, Massey-Ferguson: Founded in 1847 by Daniel Massey, as the Newcastle Foundry and Machine Factory, it merged in 1891 with A. Harris, Son & Company, and then with the Ferguson Company in 1953, becoming Massey-Harris-Ferguson, which was shortened a few years later to Massey-Ferguson. The various incarnations of the Massey industrial project have been global leaders in the production of farm equipment and a major employer of industrial labour in central Canada.
navvies: The men who laboured on the earliest British navigation canals. Many were Irish and, subsequently, Irish Catholic labourers on large projects (canals, railways) were referred to indiscriminately as navvies.
Reciprocity Treaty (1854): An agreement struck between Britain and the United States that enabled the free movement of raw materials between the United Stated and the British North American colonies of Canada, New Brunswick, Nova Scotia, Newfoundland, and Prince Edward Island.
Rideau Canal: Completed in 1826, an Upper Canadian canal linking Bytown (Ottawa) with Kingston. Unlike the Welland and Lachine Canals, the principal purpose of the Rideau Canal was colonial defence. In the event of an American invasion of the St. Lawrence and Great Lakes, troops could be moved between Montreal and the Kingston area via the canal.
seasonal labour, seasonal labourers: Agricultural and resource extraction industries in particular depend on the seasonal availability of labour. Spring for planting, autumn for harvesting on farms; winter for the seal hunt and for logging in the 19th century; summer for salmon runs. Pre-industrial societies often depend on the seasonal work but it continued to be a feature of life in the industrial era.
squared timber: Logs that have been “squared” so that they can be stacked more tightly for shipping. During the Napoleonic Wars the usual sources of lumber (needed especially for naval shipbuilding) were closed to Britain by French blockades. Timber producers in British North America were called upon to rapidly increase production, and stacking them tightly maximized the number of logs that could be shipped to Britain. .
staple theory: Or “staple thesis,” argues that an economy based on natural resources or other simple, unprocessed goods will develop along certain lines. In the case of New France and British North America, the dominant economic activities were obtaining and exporting a limited number of staples: furs, fish, timber, and some minerals. None of these required a significant population in the colony; none were processed in North America; all value added occurred in Europe, as did most consumption. The Canadian economic historian Harold Innis argued in the 1930s that the staple focus of the economy constrained colonial and national development, held back industrialization and diversification, and shaped government and social relations.
subsistence farming: The style of farming that provided enough quantity and a sufficient variety of crops to sustain its operators (typically, the farming family). Because it does not produce a surplus (beyond, perhaps, enough to engage in barter with other farms), the farm owner does not have anything to sell. The ability to add capacity through capital investment is thus highly limited.
tariff policies: A tax imposed on imported goods. Generally this is done to make the purchase of domestically produced goods more attractive.
threshing machine: Mechanism for separating grain from straw and chaff. First developed in the late 18th century, threshing machines became more effective in the second quarter of the 19th century. They were usually powered by horses, sometimes by wind. Mechanization of threshing significantly reduced the amount of labour needed per acre of wheat at harvest time. It also created a specialist, itinerant workforce: the threshing crew.
truck system: A system of credit extended to workers by employers or buyers. Sometimes company stores would extend credit to company employees, deducting the amount owing from the next payday. In the Newfoundland fisheries, merchants would provide fishing crews with credit for nets and other necessities for which they would be reimbursed with a share of the catch. Like all credit systems, the truck system worked better for the creditor than the debtor.
vertical integration: A production model in which the various stages in a supply chain are owned by the same individual or company. For example, 19th century railway companies sometimes owned iron and coal mines, foundries where steel was produced and cast, machine shops that manufactured the rolling stock (all of which was owned by the railway — and not just the tracks), and warehouses, grain elevators, and hotels at all the major stations along the route.
Welland Canal: Opened in 1829, linking Lakes Erie and Ontario.
wheat boom, wheat economy: The appearance of a widespread monoculture in farm output, in this case the rise of wheat as the principal crop or staple that dominated the economy, including exports and economic policy making.
wind, wood, and water: A shorthand term for the Maritime economy of the 19th century, which was dominated by timber production, (wooden) shipbuilding, and the export sector, which was based on sailing vessels.
Short Answer Exercises
- In what ways were economic ideas undergoing change in this period? Why?
- How did the Napoleonic Wars and their end impact British North America?
- In what ways were the economies of Upper and Lower Canada similar? Distinct?
- What aspects of the Atlantic colonies’ economies dominated and grew in this era?
- What was the impact of infrastructural development on the colonies?
- How did early industrialization impact British North America?
- In what ways were political elites associated with the dominant economic agenda?
- What was the relationship between agricultural expansion and industrial growth?
- What is the staple theory and why does it matter to Canadian history?
- How did tariffs and free trade impact British North America?
- How was the physical environment impacted by the emerging proto-industrial economy of British North America?
Suggested Readings
- Coates, Colin M. “An Industrial Landscape.” In Metamorphoses of Landscape and Community in Early Quebec, 125-143. Montreal and Kingston: McGill–Queen’s University Press, 2000.
- Lewis, Frank D. and M. C. Urquhart. “Growth and the Standard of Living in a Pioneer Economy: Upper Canada, 1826 to 1851.” The William and Mary Quarterly 56, no.1 (January 1999): 151-181.
- Morton, Desmond. “The Divisive Dream: Reciprocity in 1854.” Beaver 82, no.6 (December 2002/January 2003): 16-28.
- Samson, Daniel. “Industrial Colonization: The Colonial Context of the General Mining Association, Nova Scotia, 1825-1842.” Acadiensis XXIX, no.1 (Autumn 1999): 3-28.
- Schrauwers, Albert. “The Gentlemanly Order & the Politics of Production in the Transition to Capitalism in the Home District, Upper Canada.” Labour/Le Travail 65 (Spring 2010): 9-45.