PLANTING THE PROVINCE: THE ECONOMIC HISTORY OF UPPER CANADA, 1784-1870. Douglas McCalla. Toronto: University of Toronto Press, 1993. 446 pp.
A CONCISE HISTORY OF BUSINESS IN CANADA. Graham Taylor and Peter Baskerville. Toronto: Oxford University Press, 1994. 491 pp.
FARM, FACTORY AND FORTUNE: NEW STUDIES IN THE ECONOMIC HISTORY OF THE MARITIME PROVINCES. Kris Inwood. Fredericton: Acadiensis Press, 1993. 274 pp.
The last 20 years of research and writing on Canadian economic history has presented an admirable and probing examination of important, but specialized questions — from the nature of particular entrepreneurs in given communities, to the details of district migration flows, to analysis of rural social structure. New statistical approaches have been used, new theoretical perspectives have been applied, and old views challenged.
Now, as one would expect, volumes are beginning to emerge that build on this new research and present a broad perspective on some of the long-standing themes of Canadian economic development, questioning established wisdom in fundamental ways.
Douglas McCalla, for instance, in Planting the Province: The Economic History of Upper Canada, 1784-1870 puts it sharply: “Canadians have usually understood their country’s economic development, in virtually any region or period, as a process led by the successive exploitation of a number of staples, which are resource-based commodities, typically subject to relatively limited processing and destined primarily for export markets. From a staples perspective, economic growth, in which one or two sectors lead or propel the entire regional economy forward…. This book argues that focusing on staples alone yields an oversimplified and fundamentally inaccurate view of the process of economic development in Upper Canada” (5).
Graham Taylor and Peter Baskerville, in A Concise History of Business in Canada also find the staples theory too confining for their synthesis. Their effort is to transcend that framework and review the pattern of Canadian business evolution in terms of: a) how firms in all capitalist economies have shifted to specialized from general merchant activities, or have made increased use of joint-stock corporations: b) how firms in Canada have been affected by specific Canadian realities such as regional diversity and migration patterns as well as changing staple exports; and c) how the world economy has affected firms through shifting financial pressures, changes in technology, and new state economic roles.
In the work he has edited, Farm, Factory and Fortune: new Studies in the Economic History of the Maritime Provinces, Kris Inwood, too, takes on a powerful piece of conventional wisdom — the argument that Confederation brought about the relative decline of the Maritime provinces in Canadian economic development. On the contrary, says Inwood, “Canada began its national existence with strong regional inequalities. The phenomenon of regional disparities was a challenge inherited by the first national government rather than a consequence of its actions” (97).
Each of these volumes reveals three areas of strength. The first is simply that each presents effectively and professionally a very large and complex body of recent analysis and research. McCalla is especially impressive in drawing together extensive references to recent work in economic history, history, sociology, political economy and demography relating to the formative years of Upper Canada. Taylor and Baskerville have taken on a more ambitious task by attempting to cover some 350 years of Canadian business history, but their range of references is very good — and seeks to probe such areas as the role of women entrepreneurs in a helpful way. Inwood provides a fine guide to recent work on the Maritimes.
Second, all three volumes also confront the question of macroeconomics and economic development in ways that are unusual among economic historians. Money and banking here are considered not as reflections of institutional development, but much more fundamentally as a central issue in the process of accelerating investment, in a context where this could generate more aggregate demand and real economic growth through increased migration and increased demand for agricultural production. Thus we note improved agricultural productivity as proceeds from sales were put back into farm improvements, increased settlement and land-clearing, and increased industrial and craft-based production serving that larger settler population.
McCalla shows how the major role of the Upper Canadian state was to expand dramatically the public debt of the colony for investments in canals, roads and public works, with high social returns but limited private returns. Between 1825 and 1837, the state’s public debt increased by a factor of 34, and new banks were set up that seem to have doubled the money supply in circulation between 1830 and 1836. McCalla makes the point that this expansive monetary policy was quite similar to though somewhat more restrained than the easy-money policies of Upper Canada’s neighbouring American states.
Earlier economic historians such as Aitken have analyzed these activist Canadian state development strategies in terms of quite distinctive “defensive expansionism,” but both the McCalla and the Taylor and the Baskerville texts see Canadian macroeconomic state initiatives as reflections of similar moves by American and European governments. The classic study by George Watts, the Bank of Canada: Origins and Early History (Ottawa: Carleton University Press, 1993) shows this point vividly in reviewing the roots after the American federal reserve system had been established, and even drew on a senior British central bank officer as deputy governor.
In addition to the strengths of a comprehensive literature review and a perceptive discussion of the state role in Canadian economic development, the third positive element of these volumes is the focus of each on agriculture. Increasingly, in developing countries, it is understood that the basis of self-sustaining and balanced economic development is a smallholder-based strategy built on careful understanding of existing farming systems, within which it is possible to work with farmers to bring about increased income and productivity. That rural-oriented perception is also at the heart of these analyses. It is McCalla’s major reason for rejecting the staples thesis; he sees the complex mixed farms of Upper Canada, with their wide range of production, as far too complicated to analyze in terms of just one of those products (wheat). Taylor and Baskerville, too, focus on agricultural enterprise as a form of business that dominates and shapes the way the Canadian market works far more than Creighton’s small group of Montreal merchants. Similarly, Inwood (and Acheson) find detailed analysis of agriculture far more helpful in understanding Maritime inequality than the political issues flowing from Confederation.
This topic of agricultural development is also where some of the most insightful statistical work in Canadian economic history has been taking place. Acheson’s article in Inwood presents details on New Brunswick agriculture drawn from the 1870 Canadian census that revisit the myth of meagre, marginal farms clinging to the edge of the dominant timber economy — showing instead marked farm differentiation that includes an important large-farm sector with productivity and income as high a those seen in Maine, New Hampshire and Quebec. However, Inwood also shows that the largest source of 1870 income differentiation between western Ontario and the Maritimes (and Quebec) was in agricultural activities.
McCalla examines the evolution of this productive Upper Canadian agriculture, using farm level data, by year and by commodity, for widely scattered farms from the Bay of Quinte to Lake Huron to allow assessment of his analysis. But two significant questions do emerge. First, why does McCalla not deal seriously with the question of land-holding patterns in Upper Canada? Taylor and Baskerville underline this question in their analysis of Upper Canadian agriculture, as a central point of angry political debate at the time, noting for instance that much of the land in two of the richest counties near York had gone to speculators with close government ties even before settlers had a chance to buy it. Such land policies may have retarded agricultural development and help to explain why farm incomes were much higher further away from the York-Hamilton-Niagara area.
Second, the details of McCalla’s analysis continue to raise questions about the role of wheat in Upper Canadian agricultural development. It is clearly true, as McCalla suggests, that Upper Canadian farms did produce a great variety of products, and that many products were marketed besides wheat. But the staples thesis has never been about exclusive farm-level production or even the marketing of wheat. The fundamental question has been about whether wheat was the main profit-producer for that minority of farmers growing a significant agricultural surplus. To answer that question definitely, we would need cost of production data as well as revenue data by year and by commodity, which McCalla does not include. Yet it is possible to draw some suggestive points from what is known.
The heart of the question is surely the fact that in most of Upper Canada two wheat crops (spring and fall) could be produced. But, as McCalla notes (74), for 1860 this was done more by larger farms (of 170 or more acres, 47 percent of which planted fall wheat, compared to only 36 percent of mid-sized farms). This suggests that the costs of production of extra wheat output mainly made sense for those farm enterprises with enough farm labour in the family or hired labour, or with enough cleared land available, to undertake a fall planting of wheat. The productivity of the land associated with this second crop would also have to be high enough to justify the extra labour cost. For larger farms, then, wheat may have been particularly important in accumulating cash, mechanizing faster and ever expanding land holdings; it may have also have been the means by which to finance investing in dairy herds for the next phase of agricultural expansion in Ontario, in which cheese and other dairy products played such an important role.
Dynamics of that sort would reinforce the importance of wheat as a staple commodity, and would strengthen the traditional case made in Canadian economic history that the particular character of the staple commodity (given its emphasis on wheat) compared to Maritime agriculture where, as Inwood notes, much less wheat could be grown.
There is another broad concern these volumes raise. All stress the role of markets. Yet the focus in both McCalla and Taylor and Baskerville is very much on markets for commodities, markets for land and markets for capital. In Karl Polanyi’s classic analysis of the rise of capitalism in Britain, however (The Great Transformation), the most dramatic socio-economic change spurred by capitalist change was the rise of the self-regulating labour market. A history of business in Canada should surely highlight that question, especially since emerging labour market conditions were the focus of much early group organization by Canadian firms. The latter part of the period McCalla is analyzing in Upper Canada also shows the development of parallel wage rate shifts in widely separated communities, in addition to both employee and employer efforts to redirect labour market pressures (such as the mass Nine-Hours Movement led by early trade unions); these, too, were signs of the rise of a labour market in central Canada. This analytical gap should be addressed in future efforts at historical synthesis.
In conclusion, these provocative volumes open up new questions just as much as they challenge the political economy of an Innis or a Lower. All three highlight the valuable work which Canadian economic historians have been doing, all three present useful challenges to old orthodoxies, and all three are important contributions. Nevertheless, to achieve the new synthesis toward which these volumes are aiming more theorizing is still needed about the place of agriculture in our economic history, the nature of entrepreneurship and labour market development in this country, and the roots of Maritime inequality.
Copyright Trent University Summer 1995
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