Pre-Confederation Canadian History

Figure 9.4 An 1855 map of Canada West (formerly Upper Canada) by Joseph Hutchins Colton. The counties are easily visible as are the growing number of towns and villages.

Upper Canada was the principal beneficiary of British emigration in these years — the destination of choice.[footnote]Hugh J.M. Johnston, British Emigration Policy 1815-1830: “Shovelling Out the Paupers” (Oxford: Clarendon Press, 1972), 51–4.[/footnote] One consequence was that the sale of lands (and the speculation in land values) was a major source of wealth. Immigrants with a bit of money could buy ready-cleared properties or better located farms facing water routes that positioned them to realize success either in farming or in land resale. Against this setting, the market for British North American grain had taken a tumble after the end of the war, especially in 1820, and prices fell badly. Up to about 1816 the rapid growth in the British population discussed earlier needed feeding and had been the source of wealth for anyone who could produce a surplus of wheat. After two generations of slow pioneering farm expansion, Upper Canadians were finally in a position to do well on that market. The post-war economic crisis, coupled with increased production of wheat in the colony (much of it coming from post-war immigrants) made for increased competition in a shrinking market and, therefore, economic uncertainty.

Colonial Grain in Imperial Markets

Things were made more complex by the Corn Laws, which were protective tariffs put in place as part of the mercantilist system that channelled colonial products to imperial ports and limited colonial imports from non-imperial sources.  The Corn Laws were introduced in 1815 and, for five years, British North American grain enjoyed the same privileged status on the British market as homegrown grain. Then, in 1820, British grain output improved and Upper Canadian wheat growers found their product reduced to the same status as “foreign” grain. For the next seven years farmers in British North America struggled along until their privileged status was restored. A wheat boom followed that lasted into the 1850s.

These developments further encouraged people to move into farming. The number of larger farms increased, and the number of acres under plough nearly doubled from 1826 to 1832. Farmers, too, stretched their productive capacity to take advantage of their place in the British market, which could mean going into debt.

Related to the growing farm economy was the rise of a colonial merchant class in Upper Canada that specialized in the wheat business. Their profits were tied to bulk shipping, so these merchants were inclined to support infrastructure improvements that benefitted the movement of bulk freight. Mostly this meant storage facilities, docks, shipping capacity, and eventually canals. Farmers, however, were more likely to want improvements in local roads. Some of the merchants discovered, too, that there was money to be made in transshipping American wheat and flour. Once the foreign product was in British North America it was treated as though it were covered favourably by the Corn Laws. When it came to raising revenues for government, business merchants (through the dominant political oligarchy) invariably supported property taxes and taxes on land sales while farmers (who were most hard hit by taxes) preferred duties charged on trade (which was anathema to merchants). These developments resulted in tensions between farmers in Upper Canada and merchants.

The staple theory, already discussed in terms of how it applied to resources like fish and furs, can be used to understand the wheat economy as well. The lack of diversification in the Upper Canadian farming economy is a symptom of the limits of a staple-dominated system. Tobacco was a popular crop in the 1820s, as was dairy production, but neither came close to wheat as a principal product. Wheat, unlike fur, is not a luxury product: a lot of wheat is needed to turn a profit. It is what economists refer to as a high-bulk, low-value product. It requires larger ships to move a greater volume, and that investment in specialized shipping does not necessarily support the movement of any other goods. In other words, grain ships are grain ships, not container ships that can carry a multitude of different products. Nor are they smaller, faster vessels designed to transport textile products. Further, any shipping requires the infrastructure of waterfront docks, warehouses dedicated to stockpiling grain, and improvements in shipping routes. Since the vast majority of British North American grain originated in Upper Canada, the priority was building canals in order to load up barges on Lake Ontario or even Lake Erie and send them downriver to Montreal or, better still, put the grain onto ships that could head straight out into the Atlantic.

Figure 9.5 An 1824 land deed from Upper Canada. The buying and selling of farmland was a critical part of the colony’s economy and an important function of the government.

The Upper Canadian wheat economy comprised, therefore, several elements: profitable and speculative land sales; the business of land clearing (forestry) and preparing for farming (or sale); farming itself; and shipping. Given the privileged character of land grants in Upper Canada and the obvious fact that shipping is not something in which farmers are typically involved, most of the money in the wheat economy was made by people who did not actually work the land. Farmers did well and some did very well, but not so well as those who owned the infrastructure and the merchant houses responsible for the movement and sale of wheat.

It has to be added, too, that not all farmers were beneficiaries of the wheat economy. It has been observed that the self-sufficient farm in pre-Confederation British North America is something of a myth: farmers everywhere turned from time to time to other sources of income or revenue. In Upper Canada it was the larger and better capitalized farms that could afford to specialize in grain sufficiently to profit by the wheat economy. Rather than “mining wheat,” as it has been called, Upper Canadian farmers more often grew a variety of crops destined for the growing townships nearby with their expanding non-farming populations.[footnote]Marvin McInnis, “Marketable Surpluses in Ontario Farming, 1860,” in Perspectives on Canadian Economic History, ed. Douglas McCalla (Toronto: Copp Clark Pitman, 1987), 55.[/footnote] Obviously, for the multitude of smaller farming households, the construction of canals was of little value: they needed roads to transport their wheat to town markets.

Attributions

Figure 9.4
Canada West by BotMultichillT  is in the public domain.

Figure 9.5
Province of Upper-Canada land deed by BrianJGraham is used under a CC-BY-SA 3.0 license.

As the oldest settlement colony in British North America, Lower Canada had certain advantages. The infrastructure of banks, warehouses, shipping capacity, merchant houses, schools and hospitals, and the military were all much more evolved than in any of the other colonies. Against that, much of the best arable land was spoken for by 1818, some farmland was in need of rest and fertilizing, and the demographic model of large, often extended farm families meant that greater resources had to be dedicated to subsistence than was the case with smaller families in the English Protestant colonies.

Although wheat remained an important share of Lower Canadian farm production throughout the first half of the 19th century, the colony never developed the same degree of dependence on grain as did Upper Canada. Nor did it achieve the same surpluses for export. By the 1830s Lower Canada was a net importer of wheat (overwhelmingly from Upper Canada). This reflects three things: a move to mixed farming geared to feeding Lower Canada first, a rising population that effectively ate up the surplus, and soil exhaustion. It has to be said, too, that Lower Canada’s farm belt was less well suited to wheat than was Upper Canada’s.

Growth in the colony’s economy was stimulated by the trade in timber. The Napoleonic Wars, as we have seen elsewhere, stimulated growth in logging camps and the squaring of timbers. This trend continued into the 1820s and 1830s. The tributaries of the St. Lawrence — including the Ottawa River Valley — hummed with activity as logging camps spread along the fringe of colonial settlement. It has been observed that farming in Lower Canada took place at the heart of the colony, the fur trade far beyond its limits, and logging right at its edge.[footnote]Kenneth Norrie and Douglas Owram, A History of the Canadian Economy (Toronto: Harcourt Brace Jovanovich, 1991), 146-7.[/footnote] Each of these sectors was organized differently: from the family farm, to the far-ranging fur trade in which voyageurs and coureurs de bois predominated, to the typically all-male logging camp in which wage labour was the norm. This last mode of production — wage labour with a large number of semi-skilled workers — would emerge as a characteristic of British North America as a whole in the 19th century.

Agriculture remained at the heart of the economy in Lower Canada throughout the 19th century because culturally and socially there were pressures to stay on the land. The clergy and the state alike were heavily invested in the administrative and confessional units bound up in the seigneuries, as were, of course, the seigneurs. The question then arises, why was the Lower Canadian farming sector seemingly stagnant?

One school of thought places the blame on cultural timidity, a mentalité among farmers that was unprogressive. This was the stand taken by Fernand Ouellet in a study published in 1980.[footnote]Fernand Ouellet, Economic and Social History of Quebec, 1760-1850 (Ottawa: Gage, 1980).[/footnote] Historical geographer Cole Harris took the same view, saying that by the 1820s, “French-Canadian agriculture, inflexible, uncompetitive, and largely subsistent, was incapable of supporting a growing population.”[footnote]Cole Harris, “Of Poverty and Helplessness in Petite-Nation,” Canadian Historical Review 52, issue 1 (March 1971): 23-50.[/footnote] Harris has since changed his view and has joined the ranks of historians who argue that the pre-1850 farm economy in Lower Canada was, in fact, diversifying, that there is evidence of experimentation and growth.[footnote]Cole Harris, The Reluctant Land: Society, Space, and Environment in Canada Before Confederation (Vancouver: UBC Press, 2008), 242-259.[/footnote] The issue arises as to whether stagnation (or growth, come to that) was related to the “peasant” condition of Canadien farmers. Their farms were much more organized around subsistence than commercial sales, so breaking out of that pattern (one that dates back to the 1660s) was a unique challenge.[footnote]See also Serge Courville and Normand Séguin, Rural Life in Nineteenth-Century Quebec (Ottawa: Canadian Historical Association, 1989). I am grateful to Frank Abbott for his insights into this debate.[/footnote] The rise of larger cities and concentrated lumber industries meant new growing markets for farm surpluses, and this was no doubt critical in the move to a commercialized agricultural sector. The archetypal rural cash crop in Lower Canada — maple syrup — would clearly benefit from an urban or working-class marketplace.

Regardless of the historical forces that abetted or obstructed change on the seigneuries, there remained the critical shortfall of the farming sector in Lower Canada: the colony was unable to support its rapidly increasing population. The principal results would be movement within the colony — mostly to the towns and cities but also to more marginal, newly opened seigneurial lands — and emigration. They found a welcome of sorts in New England. By the 1830s industrialization was underway in Massachusetts and demand for labour in the state’s textile mills was expanding more rapidly than could be met by the local labour supply. Rather than move to more marginal farm land in, say, the Saguenay Valley or off to a farming frontier in another part of British North America — that is, to an anglophone, Protestant colony — Canadiens found it easier to sojourn in New England where wage labour was good.

The limits of Lower Canadian agriculture and its ongoing vulnerabilities were issues in the political unrest of the 1830s. So too was the outmigration to New England and the movement off the land into the towns of Lower Canada. From a cultural perspective, economic worries and depopulation of the countryside looked like a threat to the survival of the Canadien fact. Together these social issues would produce political tensions that came to a head in 1837-38.

The war in Europe and the War of 1812 were over in 1815. British North America would not face another external threat to its survival until the American Civil War in the 1860s. It is worth remembering that a generation had been raised in Europe in the shadow of the French Revolution and war, followed by Napoleon’s expansionism. And a generation of British North Americans had found jobs building ships, stitching sails, winding ropes, casting cannons, and supplying food to huge armies and fleets abroad. Suddenly that came to an end. As the armies of Europe demobilized, the economies of the North Atlantic adjusted to peacetime. For the most part, it was a very uncomfortable transition.

What most of British North America had in common was an ample supply of available land. Not all of it was of the same quality. Newfoundland’s agricultural potential was very limited and so it never experienced that “farming frontier” settlement boom found in other colonies. Nova Scotia, too, was limited by thin soil outside of the valleys along the Bay of Fundy. Population poured into Lower Canada’s Eastern Townships but the limits of that territory were reached in a few decades. The big winner was Upper Canada, whose population grew almost entirely on the strength of new farm settlement, rising from 14,000 in 1791 to 95,000 at the end of the War of 1812. By 1824 it had grown again by 50%, and by 1840 there were more than 430,000 people in the colony.[footnote]Douglas McCalla, “The ‘Loyalist’ Economy of Upper Canada,” Social History 16, no.32 (November 1983): 285.[/footnote] Immigration dominated the engines of population growth in the colony and the few thousand Loyalists who founded the colony were quickly and severely outnumbered.

Until the War of 1812, however, the ability of British North American farmers to make much economic headway was limited by landscape. Clearing heavily treed land was difficult work. One estimate reckons that a single farmer (perhaps making use of some extended family labour) could clear 1.5 to 3 acres a year and that a minimum of 3 acres was needed to achieve subsistence.[footnote]Kenneth Norrie and Douglas Owram, A History of the Canadian Economy (Toronto: Harcourt Brace Jovanovich, 1991), 168.[/footnote]  This produced a colony of subsistence farming right down to the end of the war, by which time the colony began to round a corner.

The Economic Impact of 1812

Several aspects of the economy changed with the War of 1812. First, the war was itself a dissuasive force when it came to continued American immigration into British North America. The Late Loyalists were American migrants who reached the limits of upstate New York and simply crossed into the Niagara Peninsula. After 1812 that traffic slowed significantly. The fall of Tecumseh’s forces opened up lands in the Ohio and farther west for Americans and, of course, the border now meant more than it did before the war. The colonial administration of Upper Canada, feeling insecure and vengeful, cut off land grants to Americans, effectively freezing economic growth in the Niagara for a generation. Immigration sources would have to change. Britain offered up new possibilities: in this new post-war age, however, they would arrive by the boatload and not as individual migrants or families. The population boom of the 18th century — which had seemed at the time like a huge increase in national wealth and power, insofar as it provided an enormous number of troops to fight against France — was now a liability. The British government decided to direct the outflow of population to reduce unemployment and suffering at home and to increase the economic capacity of its colonies abroad. For a decade waves of state-sponsored emigrants departed Britain and wound up in British North America.

Secondly, the British economy was badly beaten up by the conflict in Europe and the North American theatre of combat. Certainly there had been growth sponsored by the war itself and there was already evidence of the coming industrial revolution. But, beginning in 1815, a recession settled in. Unemployment spread throughout the British Isles and demand for British North American exports declined sharply. Recovery was in the near future, but the post-war crash was a foretaste of the kind of economic volatility that the new industrial economy had in store for the whole Atlantic rim.

The late 18th century was a period of unprecedented intellectual excitement. Revolutions associated with political power structures were driven by new ideas that were themselves revolutionary. Political ideas like democracy and those set out in Thomas Paine’s Rights of Man proposed to overturn the fundamental relationships between social classes and centuries-old notions of both deference and noblesse oblige. At the same time, new fields of study were emerging that would challenge the power of older institutions. Geology threatened the Christian belief in a world that was a mere 4,000 years old; three centuries of refining navigational tools had produced the equipment necessary to look into space and into individual cells. The world was about to become much older, much newer, much larger, and much smaller at the same time.

Economics, as well, was about to emerge as an arena of serious study and debate as early practitioners searched for overarching principles and values that would help them formulate the right questions before rushing off in search of the right answers. Two influential British figures in this respect deserve mention: Thomas Malthus and Adam Smith.

Malthus and the Agricultural Revolution

Figure 9.1 Malthus’s Essay on the Principle of Population was a pioneering attempt to apply scientific principles to the workings of the economy.

Thomas Robert Malthus (1766-1834) was a smalltown vicar concerned with the relationship between famine and population growth. In 1798 he published An Essay on the Principle of Population, in which he argued that population growth would always be reined in by positive restraints that raise the death rate and negative checks that lower the birth rate. It is thanks to Malthus that economics acquired the title “the dismal science,” because he could see no morally defensible way around a cycle of increased food production followed by population booms and then by famine and collapse. (As a vicar, he could not entertain the notion of birth control, although he did advocate for personal sexual restraint.)

Malthus was proved wrong, at least for two centuries. Food production could increase more rapidly than he anticipated and fertility rates would, simultaneously and against all predictions, drop significantly in the industrializing world. But Malthus provides an important window into how people in the late 18th and early 19th centuries understood the world around them. Famines had wracked Europe for centuries and Malthus’s generation bore witness to them. And the last major famine in the British Isles — the Irish Potato Famine of the 1840s — was yet to come. People who thought about economies understood shortages not as mere inconveniences that might run the price up a bit, but as terrible events they had seen in their lifetimes, the kind of thing that led to violence, starvation, and mass die-offs. Malthus posited a scientific system for understanding why this was so, why prosperity and growth seemed always to be followed by starvation, war, and mortality.

Figure 9.2 Malthus reckoned that population increased much faster than food production and that famines were thus inevitable.

There was something else that Malthus observed without necessarily realizing it. When he wrote about increases in agricultural output he did so in the context of the agricultural revolution. Food productivity had been climbing steadily in Europe and North America since about 1700. More effective farming techniques and different landhold patterns lay behind these changes, as did improved infrastructure and thus better communication between markets and farmers. Whether he knew it or not, the rate of agricultural increase that he described as a fact was, in reality, part of his own historical context. Earlier generations simply could not have imagined the rate of food production growth that lay at the heart of Malthus’s model.

Malthus and many of his contemporaries were keenly aware of one other truth: Britain’s population was surging. It had nearly doubled in the 18th century; more than 4 million people had been added. It was this growth that would spur enormous economic changes in Britain and provide the fuel for an explosion of immigration to British North America and other colonies.

An Economic Revolution

In short, ideas about the economy were evolving at a time when the economy itself was transforming. In our own era, we are accustomed to the idea of change, not least because we can look back on a record of nearly 300 years of significant change. But in the late 18th century change was still rather frightening. Centuries of feudal relations and food production were only just beginning to face challenges. Absolutism was, until the 1780s, impregnable across Europe. Colonies followed the direction of empires and both France and Britain were very conservative in this respect. The vast majority of humans lived on the land. With the exception of small numbers of emigrants to the colonies, farming people stayed put; people mostly lived, married, and died in the village of their birth. It was rare for Europeans to travel far unless they were wealthy or in an army.

North America changed all of that. Revolution in the British colonies was both stimulated by and responsible for emergent ideas about government and citizenship. What followed in France was more than an echo in that it rocked to its foundations the very idea of absolutist government and an aristocracy. Additionally, the Americas were the scene of widespread experimentation with non-feudal landholding systems that produced dramatically higher surpluses. The modest family farm of New England and Upper Canada would be a conceptual force strong enough to topple whole regimes in Europe. The mass production possible in slave colonies, moreover, created a need for bigger and better freight shipping, warehousing, and processing. In the 1770s and 1790s important technological changes in the processing of raw cotton and the weaving of cotton cloth transformed overnight the plantations of the American South, causing an explosion in technology that would lead ultimately to wholesale industrialization around the North Atlantic.

The principal beneficiaries of all this activity were the advocates of mercantilism. The merchants and shipowners of Europe’s westward-facing ports had enjoyed 200 years of accumulating wealth in trade between North America and the empire. Their money — their capital — was now substantial, and they were beginning to invest in projects that had nothing to do with fishing boats or beaver pelts. What British historian Eric Hobsbawm called “the age of revolution” that began in the second half of the 18th century would, thus, have many and widespread ramifications, not the least of which were economic.[footnote]Eric Hobsbawm, Age of Revolution, 1789-1848 (NY: Vintage Books, 1962, 1996). [/footnote]

Figure 9.3 Adam Smith, author of The Wealth of Nations and a severe critic of mercantilism.

Classical Liberal Economics

Adam Smith (1723-1790) had a thing or two to say on these topics. His 1776 book, generally known by the shortened title The Wealth of Nations, argued for the free movement of investment. Removing constraints and allowing capital to be invested where profits are likely to be greatest would produce economic growth for the greater good of the nation, he argued. This was a revolutionary proposition in a world governed by tariffs and Navigation Acts; it was revolutionary, too, in that it called for the betterment of “the nation” rather than the Crown. To much of the European and even the North American establishment, wealth rightly belonged to those of good birth and royal favour. Handing power over the economy to mere merchants and capitalists was akin to handing them a loaded gun. Nevertheless, new schools of economic thought advocating a liberal approach were on the rise and they challenged efforts to conserve the old order of economic power.

The wars in Europe arising from the French Revolution and then the Napoleonic era postponed the peacetime necessary to test some of the theories of Malthus and Smith, but it was during this 30-year period of instability that many of the key economic changes took root. As is often the case, the wars presented opportunities to build capacity for production because the state reliably demanded large quantities of goods for its troops. Wool production increased in Europe; cotton production increased in the American South; timber, shipping, and fisheries production increased dramatically in British North America. Then, in 1818, it all collapsed.

The 19th century opened, then, with a flurry of new ideas. The United States was a democracy, a republic, and a nation state. There was no crown to enrich or serve, no suggestion that the president was infallible due to the kind of divine right enjoyed by Louis XIV in France. Britain might be known as the United Kingdom, but the power of its kings had never been more compromised than it was under George III. France, of course, had become a republic and would spend the next hundred years reinventing itself as a secular democracy and, again, a nation state. What then was the purpose of the economy in a colony? How might it grow and to what end?

Attributions

Figure 9.1
An Essay on the Principle of Population by Lupo is in the public domain.

Figure 9.2
Malthusian catastrophe by Kravietz is used under a CC-BY-SA 3.0 license.

Figure 9.3
AdamSmith by Protonk is in the public domain.

Welcome to BC Open Textbooks. This is your first post. Edit or delete it, then start blogging!