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The characteristics of trade development in Canada have been dependent on her geographic background. The vast angular shaped mass of pre-Cambrian rock, bounded on the southeast by a fault line which forms the bed of the St. Lawrence River and on the southwest by the series of lakes extending from Lake Superior to Great Bear Lake, has been the key to Canadian development.

Relatively hostile in soil and climate to agriculture, it was favorable throughout its southern reaches to coniferous forests and fur-bearing animals. The French, forced by the English from the dry fishing industry, prosecuted on the west coast of Newfoundland at the front entrance of the St. Lawrence, developed the resources of such restricted areas as Canso and Gaspé and at the latter point came in touch with the hunting Indians and the fur resources of the Canadian shield.

In spite of competition from the Dutch on the New York route they succeeded by steady penetration through outposts at Quebec, Three Rivers and Montreal in gaining control over the northern tributaries of the St. Lawrence and especially of the Ottawa which connected by a low height of land with the French River running to Georgian Bay and in turn with the upper lakes. The difficulties of maintaining the St. Lawrence in the face of competition from the Iroquois on the New York route led to the search of Radisson and Groseilliers for an alternative route and the discovery of Hudson Bay. But this route involved additional competition and was developed by the Hudson’s Bay Company (incorporated 1670).

With competition from the north and the south, the French after a determined and partially successful struggle lost control of the northern route in the peace of Utrecht 1713. The final blow against renewed competition from Hudson Bay and New York came with the penetration of La Verendrye through the centre by Kaministiquia (Fort William) to Lake Winnipeg and the Saskatchewan. There followed the golden age of the French régime (paralleled by the golden age of 1900 to 1914 again following the opening of the West) but the costs proved too heavy and the fall of New France was inevitable.

The advantages of shorter routes by Hudson Bay and New York were supported by cheaper manufactures and the economic development of the old empire. The fishing industry carried on by the English spread from Newfoundland to New England on the mainland. In Newfoundland the industry remained under the control of the ports of Devon, Dorset, Cornwall, or the west country and the handicap of soil and climate restricted agriculture, forest industries and settlement.

Abundant water power resources have played a great part in the industrial development of Canada. The Paugan Falls plant of the Gatineau Power Corp, in Northern Quebec is typical of the huge enterprises that have tapped these resources.

New England on the other hand with a geographic background favorable to agriculture, lumbering, the fur trade and settlement, supported an expansion of trade to the southern plantations, to the West Indies, to Europe, and to the mother country. She sold dried fish, lumber and agricultural products to the sugar plantations of the British, and later, the French West Indies, rum, molasses and agricultural products to Newfoundland, fish to Spain, and rum to Africa for the purchase of slaves to be sold to the sugar planters. The development contributed to the retreat of the French from Nova Scotia in 1713 and from Cape Breton and Canada in 1763.

France was a continental area interested in a large home market and self-sufficiency. England was an island interested in expanding trade. The expansion of England involved the retreat of France. The old empire laid claim to the North American continent.

Long before 1763 there were signs of weakness in the old empire. New England and the colonies were becoming competitors of England. Economic expansion broke the tightening bonds of political control. The line of cleavage illustrated strength and weakness. Staple producing regions such as Newfoundland and the West Indies involved reliance on the mother country and the growth of vested interests. British planters complained of New England support to the French West Indies and succeeded in securing legislation in the Molasses Act of 1733, and more serious, the Sugar Act of 1764, designed to restrict New England activities. The fur trade of the St. Lawrence was added to the fishing industry of Newfoundland and the sugar plantations of the West Indies. The old Empire broke along lines which left intact the staple producing areas and which saw the disappearance of the closely integrated economy of the thirteen colonies.

In the pitiless grinding of economic forces and the adjustments which were settled by force of arms based largely on economic strength Great Britain with her emphasis on the sea became a trading and industrial centre importing staple raw materials and exporting manufactured products. France had failed to maintain a metropolitan organization capable of absorbing vast supplies of staple products and England had failed to develop a political organization capable of including competing economies.

Where early traders exploited the fur-bearing and fisheries resources of the Dominion, great industrial plants have established themselves across the country. Illustrated is the plant of the Dominion Coal and Steel Co.

Anglo-American traders re-established the fur trade from Montreal to the Northwest after the retreat of the French. In the Northwest Company, and with lake navigation, they pushed the trade far beyond the bounds set by the French to the Mackenzie River drainage basin in 1778 and to the Pacific coast in 1812, (a second golden age for Canada). But the Northwest Company, like the French traders who had preceded it, felt the effects of competition from Hudson Bay and in 1821 it was amalgamated with the Hudson’s Bay Company and furs ceased to come down from the Northwest to the St. Lawrence. On the Pacific coast furs were sent to China and by the Horn to England and in Western Canada by Hudson Bay.

A new staple product emerged on the St. Lawrence as furs disappeared. Under a heavy imperial preference during the Napoleonic wars square timber was floated down to Quebec and to Saint John in the Maritimes for export to Great Britain. White pine followed the beaver. Ships which carried timber to Great Britain brought back settlers and supplies and immigration flourished. By the middle of the nineteenth century the St. Lawrence had been improved by completion of the Welland canal and of the upper St. Lawrence canals and the way had been prepared for the advance of agriculture and the expansion of wheat exports.

The expansion of wheat production assumed the industrial growth of England and the demands of an urban population which had contributed to the disappearance of restrictions in the abolition of the Corn Laws. The effects of iron and coal and the industrial revolution in England were shown in the development of steamships and railroads. Wheat production assumed not only demands of industrial England but also supplies of steel from industrial England in building railways and steamships.

The disappearance of sailing ships was accompanied by the decline of the square timber trade to Great Britain. Expansion of urban centres of the United States and exhaustion of more accessible forest areas in the East created a demand for sawn lumber and led to the development of sawmills in the Ottawa Valley and in other parts of Ontario, reaching eventually the north shore of Georgian Bay. Sawn lumber exports to the United States tended to replace the square timber trade with Great Britain.

In the Maritimes the decline of wooden sailing vessels brought acute problems. The dry fishing industry suffered a severe blow. In both Canada (Ontario and Quebec) the revolution brought by the introduction of railroads necessitated new political developments which culminated in Confederation (1867). On the Pacific coast, the fur trade was superseded by placer mining in the rush to the Fraser River in 1857-8. The problems which followed depletion led to the inclusion of British Columbia in 1870 and to the agreement requiring construction of the Canadian Pacific Railway. Construction of a transcontinental railway completed the downfall of the Hudson Bay route and re-established control of the St. Lawrence route which had disappeared in 1821.

Completion of a transcontinental railway was followed by the opening of the West, the spread of wheat production from Ontario to the prairies and the emergence of a third golden age from 1900 to 1914. Not only were the railroads, (two new transcontinentals were added in this period) responsible for an extremely rapid increase in wheat production but also for the development of mining in the Canadian shield and in the Cordilleran region of the Pacific coast. Sudbury, the centre of the world’s supply of nickel, grew up on the main line of the Canadian Pacific Railway. The fabulous resources of Cobalt were discovered in the construction of the Temiskaming and Northern Ontario Railway from North Bay and this discovery was followed by the opening of the gold fields at Porcupine and Kirkland Lake and of copper at Noranda. Asbestos was discovered with railway construction in Quebec.

On the Pacific coast the mining industry of the Kootenay region became the forerunner of Trail. Placer mining spread northward and led to the strike on Bonanza Creek in 1896, and the Klondike gold rush. The lumber industry and the fishing industry developed in relation to extensive natural resources and a wide market afforded by the railway.

Depletion of resources of pulpwood in the United States was followed by the migration of pulp and paper plants to virgin forests of spruce. The St. Maurice Valley, the Ottawa Valley, Lake St. John region, the St. Lawrence and the Great Lakes, and the Maritimes and the Pacific coast were among the areas in which large newsprint mills were built to produce newsprint primarily for the American market.

The impact of the development of these basic industries was felt in the secondary industries throughout Canada. The demands of the rapidly increasing population of the western provinces concerned with wheat growing stimulated the lumber industry of British Columbia and Ontario, the agricultural implement industry and the host of industries which expanded and sprang up in the urban and metropolitan centres of Eastern Canada. In turn, demands for power in the mining industry, the pulp and paper industry and the industrial East were responsible for the emergence of the Ontario Hydro-Electric Power Commission and the development of a wide range of power sites from the Atlantic to the Pacific.

In the main, the expansion stage of basic industries which followed the railroads and the industrial revolution in terms of iron and coal and more recently hydro-electric power and gasoline has reached its peak. New minerals will be discovered, new power sites will be developed but these will not materially affect the present economic status of Canadian industry and trade. As a result secondary industries linked to expansion will tend to become exporting industries to an increasing extent—for example the lumber industry of British Columbia will be less dependent on the effects of expansion in the prairie provinces.

The basic industries through the advantage of recent industrial development of Canada will retain competitive strength in certain cases by virtue of monopoly position, and in others of mature technique and of lower costs through the less exhausted character of natural resources and the peculiar position of overhead costs in Canadian development. Moreover increasing integration between secondary industries and primary industries will continue to strengthen the Canadian economy.

The forests of Canada formed the basis of a profitable trade in her early days. Today they are still a source of great wealth. The splendid plant illustrated is that of the Mersey Paper Co. which draws on the timber resources of the Maritimes in producing newsprint.

Emphasis on staple products has been obscured in part by the development of industrialism and the increasing importance of export trade in manufactured products stimulated by power resources, by proximity to a large industrial nation, and by manipulation of treaties and tariffs. The problem of staple products is nevertheless evident, as it has been throughout the history of Canadian development. In the case of wheat, Canada is exposed to violent fluctuations in prices and yields but the effects tend to be obscured by the development along other lines. Of even greater significance is the tendency to swing back to the position after 1821 in which the St. Lawrence lost control to Hudson Bay and the Pacific.

The Panama Canal and possibly Hudson Bay have tended to exercise a powerful effect on the control of the St. Lawrence. Previously these trends have brought major internal problems including inflation at two stages in the French régime. Government ownership and public debt loom ominously with their emphasis on heavy fixed charges and their tendency to accentuate the burden on exposed industries—for example, wheat growing in Saskatchewan and the dried fish industry in the Maritimes. But already readjustment is in evidence in the realignment of monetary policy. The solution of this most urgent internal problem which penalizes a basic industry will strengthen Canada’s position in relation to other basic and secondary industries.

TRANSCRIBER NOTES

Misspelled words and printer errors have been corrected. Where multiple spellings occur, majority use has been employed.

Punctuation has been maintained except where obvious printer errors occur.

A cover which is placed in the public domain was created for this ebook.

[The end of The Drama of Canada’s Development, by Harold Adams Innis]