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Title: An Introduction to the Economic History of Ontario
    from Outpost to Empire
Author: Innis, Harold Adams (1894-1952)
Date of first publication: 1935 [Papers and Records, Ontario
   Historical Society, vol. XXX, pp. 111-123]
Place and date of edition used as base for this ebook:
   [Ontario Historical Society], 1935 (offprint of original article)
Date first posted: 19 October 2008
Date last updated: 20 October 2008
Project Gutenberg Canada ebook #183

This ebook was produced by: Iona Vaughan, Mark Akrigg
& the Online Distributed Proofreading Team
at http://www.pgdpcanada.net

This file was produced from images generously made
available by The Internet Archive/Canadian Libraries




Reprinted from Vol. XXX, Papers and Records, Ontario Historical Society.


AN INTRODUCTION TO THE ECONOMIC HISTORY OF ONTARIO
FROM OUTPOST TO EMPIRE.

By Professor H. A. Innis, M.A. Ph.D.


In view of the important work on various phases of the subject
considered in this paper it may seem presumptuous that one should use
the title selected. On the other hand it is the plan of the paper to
emphasize the essential unity of the subject and the underlying factors
responsible for peculiar types of development, and it is perhaps not too
much to say that from this standpoint the title might more accurately be
made An introduction to an introduction to the economic history of
Ontario. It is scarcely necessary to emphasize the enormous gaps in our
knowledge of the economic history of Ontario. We have almost no thorough
survey of any of our industries and we have no adequate history of
agriculture. Extension of the subject is possible with increasing stress
on the part of the Archives, museums, and libraries, on economic
material. The most serious weakness, however, is the lack of
appreciation of the relative value of economic material or the lack of
attention on the part of economists to the evolutionary character of
economic institutions. Economics and history have suffered immeasurably
from this neglect.[1] These considerations are the justification and the
danger of this paper.

    [Footnote 1: H. A. Innis, =The teaching of economic history in
    Canada=. Contributions to Canadian economics, II, 52-68.]

An understanding of the main features of the geographic background of
the province is essential to an appreciation of the main trends of
economic development. Geological history is a prerequisite to the study
of later history. The ice age left its stamp on the history of Ontario
and of Canada. Retreating ice sheets contributed to the formation of
large bodies of water. Lake Agassiz, (now dwindled to Lake Manitoba),
Lake Algonquin (now the Upper Lakes), and Lake Iroquois (now Lake
Ontario), all with the northern outlets by Hudson Bay and the St.
Lawrence river dammed by the ice, poured through southern outlets
following respectively the Red River, the Mississippi, and the Hudson.
Lake Algonquin flowed into the Mississippi, and then into Lake Iroquois,
alternately by Niagara Falls and the Trent valley.[2] The final retreat
of the ice sheet opened the outlet of the St. Lawrence following Logan's
fault line along the southeastern edge of the Precambrian formation.
These shifting outlets have had a profound influence on economic
development since trade like water has tended to flow at different
periods through the same outlets but finally has tended to settle down
to the St. Lawrence. Soil was again largely the result of the ice age.
Earth was scraped from the Precambrian area, carried down and deposited
in what is now southern Ontario, or it was held in Lake Ojibway by the
retreating ice sheet, further north, to be deposited as the clay belt.
The geologically recent emergence of the topography has been responsible
for the broken character of the waterways especially in the Precambrian
area, and in the serious obstructions evident in the rapids of the main
outlet, the Upper St. Lawrence. The existence of large bodies of water
in the Great Lakes tempered the climate and occasioned long autumns and
late springs.

    [Footnote 2: A. P. Coleman, and W. A. Parks, =Elementary Geology=
    (London 1930) 354 ff.]

Flora reflected the influence of soil and climate. Migration of species
following the retreating ice sheet and the geographic background have
been responsible for distinct zones, first the Carolinian zone in
territory south of a line from Toronto to Windsor, and including such
species as the hickories, oaks, chestnut, and walnut;[3] second, the
hardwood forest zone extending north to a line roughly from Anticosti to
the head of Lake Winnipeg, or the northern limits of white and red pine,
and including these conifers in addition to basswood, maple, ash, elm,
birch, and beech; and third, the sub-arctic forest extending north of
the second zone to the boundaries of the province, which includes the
black and white spruce, Banksian pine, poplar, larch, and balsam. Fauna
was determined in part by thermal lines and by flora. Fur bearing
animals flourished in the hardwood forest and sub-arctic forest zones.

    [Footnote 3: See a brief survey of flora, =Canada Yearbook
    1922-23= 25-43 and of fauna, =ibid.= 1921, 82-87.]

The culture of the Indians indicated more broadly the effects of the
geographic background. The agricultural tribes of the eastern woodlands,
the Hurons, north of Lake Ontario, the Tobaccos in Western Ontario, and
the Neutrals north of Lake Erie, occupied the agricultural regions of
southern Ontario; and the migratory tribes of the eastern woodlands, the
Algonquins on the Ottawa, the Ojibway north of Lake Superior, and the
Crees south of Hudson and James Bays occupied the Precambrian forested
areas and depended primarily on hunting.[4]

    [Footnote 4: See D. Jenness, =The Indians of Canada= (Ottawa
    1932) chs. XVIII, XIX.]

Recorded history begins with the appearance of Europeans in this
setting. The importance of cheap water transportation to Quebec and
Montreal accentuated dependence on staple products[5] and led to the
development of trade in furs with the hunting Indians. Exploration and
trade led to penetration of the northerly forested Precambrian regions
by the numerous tributaries of the St. Lawrence by the use of facilities
such as canoes provided by these Indians. The territory which has become
the province of Ontario begins roughly at the point on the St. Lawrence
above which the river was practically inaccessible. It is significant
that this area was approached by a tributary which later became its
western boundary. Champlain went up the Ottawa, crossed the portage to
French river and came down to Georgian Bay. The discovery of Lake
Ontario was made from the north by Brul on the Humber and by Champlain
on the Trent system. Champlain might have descended the Upper St.
Lawrence before he ascended it.

    [Footnote 5: H. A. Innis, =Transportation as a factor in
    Canadian economic history=. Transactions of the Canadian
    Political Science Association, 1931; also =Problems of Staple
    production in Canada= (Toronto 1933).]

Trade expanded to the north and was extended in the first half of the
seventeenth century chiefly by the agricultural Indians marginal to the
hunting regions, especially the Hurons in the vicinity of Lake Simcoe
(Huronia). An alternative approach to southern Ontario was available by
the old outlet of Lake Iroquois to the Hudson river. In competition, the
Dutch, and later the English (1664), obtained furs from this region
through the Iroquois. The struggle waged between the Iroquois and the
Hurons was a prelude to the struggle between New York and Montreal,
which dominated the economic history of Ontario. The Iroquois, with a
strong agricultural economy as a base, trapped and traded along the
north shore of Lake Ontario and carried war to the point of destruction
among the Hurons, the Neutrals, and the Tobaccos.

To oppose this development, the French were obliged to take a more
direct interest in trade to the interior. Radisson and Groseilliers were
among the forerunners of traders who endeavoured to re-establish the
trade broken by Iroquois incursions, and who built up first the trade
carried on by Ottawa middlemen and later by coureurs des bois. Finally a
direct attempt to check the Iroquois and the New York route was made by
a journey up the difficult St. Lawrence rapids by La Salle and by the
establishment of Fort Frontenac in 1673. Boats were built on Lake
Ontario in 1677, and in 1679 the _Griffon_ was launched on the Niagara
River above the Falls and navigated the upper lakes and a post was
established at Niagara. A line of defense was slowly built up by the St.
Lawrence particularly with the energetic measures of Frontenac.

The Iroquois wars which were revived after 1684 and the massacre of
Lachine (1689) and constant smuggling to the English were indications of
the difficulties involved. Lahontan,[6] an expert in military affairs,
however disputed may be the merits of his work as an explorer, wrote on
November 2, 1684, "In time of war I take it (Fort Frontenac) to be
indefensible; for the cataracts and currents of the river are such, that
fifty Iroquois may there stop five hundred French, without any other
arms but stones. Do but consider, Sir, that for twenty leagues together
the river is so rapid, that we dare not set the canoe four paces off the
shoar; besides Canada, being nothing but a forrest, as I intimated
above, 'tis impossible to travel there without falling every foot into
ambuscades, especially upon the banks of this river, which are lined
with thick woods, that render 'em inaccessible. None but the savage can
skip from rock to rock, and scour thro' the thickets, as if 'twere an
open field. If we were capable of such adventures, we might march five
or six hundred men by land to guard the canows that carry the
provisions; but at the same time 'tis to be considered, that before they
arriv'd at the fort, they would consume more provisions than the canows
can carry; not to mention that the Iroquois would still out-number 'em."

    [Footnote 6: See Baron de Lahontan, =New voyages to North
    America= (Chicago 1905) 1. 66 ff.]

Development of forts along the lakes as a means of checking New York
trade was accompanied by measures to check encroachment of trade from
the North.[7] In revolt at the restraint imposed on traders penetrating
to the interior Radisson and Groseilliers deserted to the English and
the Hudson's Bay Company, under their direction, established posts at
the mouths of rivers flowing into James Bay. Competition from this
direction was followed by the establishment of posts north of Lake
Superior, designed to prevent Indians going to the Bay and by the
capture of English posts. To the north and to the south, Ontario was
being hammered by French policy into a fortified unit, guaranteeing
control for the lower St. Lawrence.

    [Footnote 7: H. A. Innis, =Fur trade in Canada= (New Haven
    1933) 41 ff.]

In the half century following the treaty of Utrecht (1713) the struggle
became more intense and led to the fall of New France. The establishment
of a post on Lake Ontario at Oswego by the English and the growth of the
rum trade following increased trade on the part of the English colonies
to the West Indies created serious problems. A strong post was built at
Niagara in 1726 and this post as well as Fort Frontenac were subsidized
as King's posts. In 1750 Fort Rouill was rebuilt to prevent trade by
the Toronto portage. The difficulties of transportation on the Upper St.
Lawrence continued and as late as 1736 the late arrival of the King's
vessels made it impossible to forward from Kingston to Niagara goods
from France.[8] On the north, return of posts on Hudson's Bay to the
English under the terms of the treaty of Utrecht necessitated renewed
activity in the construction of posts in the interior. To check English
trade at Port Nelson, La Vrendrye and his successors pushed exploration
and the fur trade to Lake Winnipeg and the Saskatchewan. In spite of
these aggressive advances, or possibly because of them, France proved
unequal to the task. The English in the final campaign broke the
southern line of fortifications by the capture of Fort Frontenac.
Temporarily the New York route prevailed.[9]

    [Footnote 8: =Select documents in Canadian economic history
    (1487-1783)= (Toronto 1929) 400.]

    [Footnote 9: See M. I. Newbigin, =Canada= (New York 1926) ch.
    XIII.]

After the downfall of New France, English traders from Albany and New
York pushed into the newly opened territory. Boats were used to
transport goods along the south shore of Lake Ontario to Niagara and in
turn to Michilimackinac and the interior. The New York-Great Lakes route
became an effective competitor. On the other hand the advantages of the
Ottawa route and of Montreal as a depot of skilled labour and technique
continued to be of first importance.

With the beginning of hostilities in the American Revolution, traders
were forced to abandon the New York route and to move to Montreal.[10]
Nevertheless the expansion of boat navigation on the Great Lakes in
relation to the Albany route made possible a combination of the
advantages of the St. Lawrence and the Ottawa routes. The canoe on the
Ottawa and the boats and vessels in the Great Lakes combined to support
a marked expansion of trade to the interior. At the close of the
American revolution the Upper St. Lawrence had become for the first time
a vital link in the development of the interior in relation to the lower
St. Lawrence. The system of lake navigation[11] built up from Albany and
the development of boats on the Upper St. Lawrence under the French were
combined and improved in relation to Montreal. The agricultural
beginnings at posts developed under the French rgime on the Great
Lakes, for example at Detroit, served as a base for the expansion of
navigation and settlement under the English and especially after 1783.

    [Footnote 10: See R. H. Fleming, =Phyn Ellice and Company of
    Schenectady=, Contributions to Canadian economics, IV.]

    [Footnote 11: See E. A. Cruikshank, =Notes on the history of
    shipbuilding and navigation on Lake Ontario to September 1816=.
    Ontario Historical Society. Papers and records, Vol. XXIII,
    1926 33-44; also G. A. Cuthbertson, =Freshwater= (Toronto
    1931).]

With the improvement of navigation on the Upper St. Lawrence fertile
land along the north shore of Lake Ontario and in the Niagara district
was opened to settlement. Moreover population in the form of disbanded
regiments, the United Empire loyalists,[12] and settlers moving westward
from the English colonies was available to settle new territory. That a
large proportion of this population was in opposition to the colonies
which had broken from British control was a favourable consideration
from the standpoint of military consolidation of the outlying territory.
In this sense Haldimand deserved the title of his biographer "the
founder of Ontario." The new settlements, especially at Niagara,
provided a stronger agricultural base for the Northwest Company. With
the decline of the fur trade in the United States after Jay's treaty
(1794), traders moved to the Northwest and larger supplies of provisions
and more adequate transport facilities were necessary to support the
extended trade. By the end of the century goods were taken up the St.
Lawrence, across the Niagara portage, and even by Yonge St.

    [Footnote 12: See W. S. Wallace, =The United empire loyalists=
    (Toronto 1914) ch. X and Jean M. Mellwraith, =Sir Frederick
    Haldimand= (Toronto 1926) ch. XIII.]

The emergence of a new community and the necessity for its protection
were evident in the Constitutional Act in 1791 and in the energetic
activities of Simcoe in the planning of roads and in reinforcing the new
province against possible aggression from the United States.[13] The
capital was moved, roads were planned, and the general military strength
of the colony placed in a position which successfully withstood the
aggressions of the United States in the war of 1812.

    [Footnote 13: William Smith, =Political leaders of Upper Canada=
    (Toronto 1931); E. A. Cruikshank ed. =The correspondence of
    Lieut. Governor John Graves Simcoe=; Hon. W. R. Riddell, =The
    life of John Graves Simcoe= (Toronto 1926).]

As a result of increasing population, larger quantities of goods were
taken up the St. Lawrence and the continued incentive to land
speculators hastened immigration. Population advanced beyond the
importing stage and in 1790 Campbell[14] noted that 6000 bushels of
wheat were bought at Kingston. In 1800 Elias Smith, the founder of Port
Hope was engaged in selling flour in Toronto and in Montreal.[15] By the
turn of the century the problem of transportation on the St. Lawrence
became serious and larger boats were introduced.[16]

    [Footnote 14: P. Campbell, =Travels in the interior inhabited
    parts of North America= (Edinburgh 1793).]

    [Footnote 15: Letter Book, Baker Memorial library. See list of
    flour shipments in 1801. =Life and letters of the late Hon.
    Richard Cartwright= (Toronto 1876) 82.]

    [Footnote 16: A boat, probably a Durham boat (invented about
    1750) was introduced between Chippewa and Fort Erie in 1799,
    which with six men carried 100 barrels and displaced the
    batteaux which with five Canadians carried only twenty to
    twenty-four. =Select documents in Canadian economic history
    1783-1885= (Toronto 1933) 138-9. Writing at Queenstown on
    June 15th, 1801 to John Askin, Robert Nichol stated "Mr.
    Clark....is building a Kentucky boat at the former place
    (Kingston) in which he intends going to Quebec with 350 barrels
    of our flour. It will (I imagine) be the first boat of the
    kind that ever descended the Saint Lawrence, and interests
    all the mercantile people of this part of the country very
    much....The quantity of flour going down this year from
    the district of Niagara is immense, say upon a moderate
    calculation five thousand barrels, which for the first year is
    really very great." Mr. Clarke made the trip from Kingston to
    Montreal in this boat in ten days with 340 barrels of flour.
    =The John Askin Papers II=, 343, 353, also =Life and Letters of
    the late Hon. Richard Cartwright= (Toronto, 1876).]

The beginnings of settlement and of exports of wheat and flour coincided
with the development of the timber trade. Square timber was floated
first down the St. Lawrence, and about 1806 Philemon Wright succeeded in
taking rafts down the Ottawa to Quebec. The American revolution, the
French revolution, and the Napoleonic wars provided a powerful stimulus
to the energetic development of settlement and of the timber trade. The
importance of naval supplies and the decline of European and United
States sources of supply led to emphasis on the British North American
colonies. Following the substantial preference of 1808, the timber trade
increased with marked rapidity and with the more aggressive attitude
toward settlement after the War of 1812 immigration provided a source of
labour for the industry. Settlement of Upper Canada, preference on
colonial timber, and the interrelations, by which emigration was
supported by the timber ships and in turn agriculture and new supplies
of labour supported the timber trade, were closely linked to imperial
policy.[17] Decline of the fur trade to Montreal after the amalgamation
of the Northwest Company and the Hudson's Bay Company in 1821 and
concentration on the York boat and the Hudson Bay route to the northwest
necessitated increased emphasis on other commodities. New settlements
such as the Talbot settlement, the Selkirk settlement, and the
settlement which followed migration of Selkirk settlers from the
Northwest[18] as a result of the aggressiveness of the Northwest
Company, and larger numbers of immigrants[19] after the War of 1812 gave
Upper Canada an additional labour supply for the expansion of trade in
timber, wheat, and flour.

    [Footnote 17: See A. R. M. Lower, =The timber trade of Canada=.
    Doctorate thesis. Harvard University. ch. IV.]

    [Footnote 18: C. Martin, =Lord Selkirk's work in Canada= (Oxford
    1916).]

    [Footnote 19: Total Immigrants to 1815 were estimated at 5000.
    In 1816 1,250 arrived, in 1817, 6,800; in 1818, 8,400 and in
    1819, 12,800. See A. R. M. Lower, =Immigration and settlement in
    Canada 1812-1820=. Canadian Historical review, III, 37-47; also
    H. I. Cowan, =British emigration to British North America
    1783-1837= (Toronto 1928) ch. IV.]

Imperial policy and its influence reached its peak and started on its
decline in the period 1820 to 1850. The Rideau Canal, with its
supporting canals on the Ottawa, was built by the Imperial government
and completed for navigation in 1832-3. After a slight reduction in 1821
the preference on colonial timber continued at a high level to 1843. The
corn laws followed a similar trend.[20] The decline was a result of far
reaching changes which were traceable ultimately to the sweep of the
later stages of the Industrial revolution. Labour displaced by machinery
was available for emigration and weavers moved to the district of
Bathurst. Emigrants[21] assisted and unassisted moved in ever increasing
numbers to the new world. Under the auspices of the Canada Company, and
of the British North American land company, capital was mobilized
respectively for settlement on land in the Huron tract in Western
Ontario and in the Eastern townships.

    [Footnote 20: A. Brady, =William Huskisson and liberal reform=
    (Oxford 1928).]

    [Footnote 21: H. I. Cowan, =op. cit.= ch. X.]

The Welland Canal (1829) gave access to the Upper lakes and provided for
movement of population to Western Ontario and for the growth of the
Talbot settlement and of Goderich on Lake Huron. Roads were extended
from Hamilton, Dundas, and Ancaster westward and from Toronto northward
to meet the demands of new areas. In 1815 the first steamship the
_Frontenac_ was launched on Lake Ontario and in 1818 the
_Walk-in-the-water_ was launched on Lake Erie. Access to the seaboard
was provided on the upper lakes by the Erie canal, completed in 1826. On
the Ottawa the first steamboat, the _Union_ was built in 1882.[22]

    [Footnote 22: See H. R. Morgan, =Steam navigation on the Ottawa
    river=. Papers and records of the Ontario Historical Society,
    vol. XXIII, 370-383.]

The timber trade emphasized the basic importance of large rivers and
strengthened the position of the St. Lawrence and the Ottawa. Timber
could not be handled by New York and as a consequence the St. Lawrence
became essentially a monopoly route. Laurentia[23] or the St. Lawrence
drainage basin, which coincided roughly with the white and red pine
areas, was the basis of the timber trade and in turn was linked to
settlement and to trade by the lower St. Lawrence to Great Britain.
Decline in importance of the timber trade followed exhaustion of the
larger trees in the more accessible areas, the diminishing demand which
accompanied increased competition in Great Britain from European
sources, and the relatively minor importance of timber with the
achievement of industrial maturity. Settlers had increased beyond the
point necessary to meet the demands of the timber trade and of the
westward movement[24] for provisions and supplies, if not for labour,
and the population of Great Britain demanded flour and wheat rather than
timber.

    [Footnote 23: See A. R. M. Lower, =The square timber trade=.
    Contributions to Canadian economics, vol. VII.]

    [Footnote 24: The demands of new settlers in the West was
    regarded as one of the causes of the difficulties of the Welland
    canal. See J. L. McDougall, =The Welland Canal to 1841=.
    Master's thesis. University of Toronto 1923. In the depression
    of 1837, 400 vessels loaded with produce were sent to Chicago.]

Increase in population, the introduction of steam navigation on the
Upper lakes, increase in the production and export of wheat, the
powerful influence of the commercial[25] interests of Montreal, and the
serious effects of the depression of 1835, which contributed to the
distress culminating in the rebellion of 1837, created problems which
were solved by the recommendations of Durham's report, the consummation
of Union of the two Canadas in 1840, and the building of the St.
Lawrence canals.

    [Footnote 25: See D. G. Creighton, =The Commercial class in
    Canadian politics 1792-1840=. Proceedings of the Canadian
    Political Science Assoc'n, vol. V, 43-58.]

By the end of the first decade after Union, a nine foot channel had been
completed and steamships were able to go down to Montreal and return.
These steamships were linked with the newly opened route for steamships
below Montreal.

The rapid increase in the importance of agricultural produce and
especially wheat precipitated the problem of the upper St. Lawrence.
Steamships, canals, and wheat involved financial support of the state.
Wheat, unlike lumber, was faced with competition from New York and in
turn involved railways as supplemental to water transportation. Portage
railways across the Niagara peninsula, from Toronto to Collingwood, and
even the Grand Trunk, were developed in co-ordination with water
transportation. Steam navigation and railways hastened immigration with
the result that, by the end of the decade 1850 to 1860, the available,
more desirable land was exhausted.[26] Population began to pour through
to the Western states.

    [Footnote 26: H. A. Innis, =Problems of staple production=
    (Toronto 1933) ch. II.]

The decline of wooden sailing vessels and of the market for timber from
Great Britain, the rise of Montreal as a rival to Quebec, and the coming
of the iron steamship and the railway coincided with the depletion of
forests in the Eastern states, the growth of cities, and the migration
of sawmills to the Ottawa and the district north of Lake Ontario. Water
power and steam power made their impact on the lumbering industry. The
reciprocity treaty, the Civil war in the United States, and the shift
from square timber to deals for the British market hastened the growth
of lumber mills. The trend was accentuated in turn by the decline in the
number of small trees.

The rise in importance of wheat and agricultural products, and the
emergence of steamships, canals, and railways coincided with and implied
responsible government and the establishment of new devices for finance.
The Upper St. Lawrence waterways, which had needed government support by
means of subsidized posts in the fur trade of the French rgime and by
an aggressive imperial policy in the timber trade in the English rgime,
continued to demand with wheat continued support. Capital investment on
a large scale necessitated more direct responsibility and supervision
and more adequate methods of finance. The Act of Union and responsible
government provided the solution; and these in turn were involved in the
problem of government guarantees and the tariff as means of acquiring
revenue. The problems of the clergy reserves, of seigniorial tenure, of
immigration and colonization roads, of railways and canals, and of
money, credit, finance, and trade, were attacked directly and
vigorously. The imperial nursery continued and became more efficient
with the decline of commercialism and the rise of capitalism. Eventually
the difficulties of finance which followed dependence on raw materials,
particularly on wheat, and the accumulation and rigidity of fixed
charges which accompanied government support to railways and canals,
provided a powerful driving force toward Confederation and the creation
of a new institution to carry the burden of debt of the United province.

Exhaustion of the more fertile land areas, problems of continued
cropping of wheat, improved transportation and navigation, and
abrogation of the reciprocity treaty led to the development of the dairy
industry[27] in the sixties, and of the livestock trade in the late
seventies. Specialized agriculture was facilitated and the varied
geographic background supported the production and export of barley,
fruit, dairy products, and live stock. Minerals were discovered and
exploited in the agricultural area, for example petroleum and its
successor, salt. The railways hastened urbanization and in turn directly
and indirectly the growth of industries and the demands for iron and raw
materials. Trade and finance flourished in the new metropolitan areas of
Hamilton and Toronto. Ontario began to develop its own nucleus of
metropolitan growth independent of that of the province of Quebec. The
success of the struggle of Senator McMaster and The Canadian Bank of
Commerce with E. H. King and the Bank of Montreal in the first banking
legislation of the new Dominion was an indication of maturity. The
aggressiveness of the new area was in direct descent from the
aggressiveness with which imperial policy had supported the development
of Upper Canada.

    [Footnote 27: "Cows numerous as swarm of bees
                   Are milked in Oxford to make cheese."

                        James McIntyre the Cheese poet.

    W. A. Deacon, =The four Jameses= (Ottawa 1927) 68.]

The problem of Confederation was that of linking together relatively
isolated areas and of providing a new base for the support of debt
lifted from the shoulders of the provinces. The Intercolonial to the
maritimes (1876) and the railway from St. Paul to Winnipeg (1878)
corresponded roughly with the depression and the national policy. The
tariff was extended to provide revenue to support new capital investment
and to guarantee control over new areas. Increase of population, the
disappearance of free land, decline in wheat production, and
fluctuations in the lumber industry released settlers for migration to
new lands made available in the West. The economy of agricultural
Ontario based largely on wheat was available to support expansion to the
prairie provinces of Western Canada. (Completion of the Canadian Pacific
railway in 1885 repaired the breach in control over the Northwest which
followed the amalgamation in 1821 and enabled an area which had become
diversified from a wheat base in relation to the effects of improved
transportation to Great Britain to become in turn a support for the
expansion of wheat production in the West). In some sense the prairie
provinces paralleled in their development that of Ontario; and the
difficult stretch of the railroad from Fort William to Winnipeg had its
counterpart in the rapids of the Upper St. Lawrence. Continued
competition from the New York route and the difficulties of Montreal and
the St. Lawrence necessitated further efforts in the improvement of
navigation below Montreal and in the deepening of the Upper St. Lawrence
canals to fourteen feet.

The improvement of the Montreal route by the end of the century provided
the base for rapid expansion in the production and export of wheat in
Eastern Canada. The turn of the century brought a violent development
with the exploitation of placer gold in the Yukon (1896) and the opening
of the Kootenay region following construction of the Crowsnest Pass
railway. As a result of these developments and of free land, population
poured into Western Canada from the United States, Great Britain,
Europe, and the older provinces. Immigrants from the old settlements of
Ontario were replaced by immigrants from Great Britain. The demands of
Western Canada had immediate effects on the industries of Eastern
Canada. The agricultural implement industry[28] and the iron and steel
industry[29] illustrated the effects of western demands. The financial
nucleus of Toronto, supported, through The Canadian Bank of Commerce and
other institutions, and such men as Mackenzie and Mann, the construction
of a rival road to that of Montreal, in the Canadian Pacific railway.
The ambitions of the Dominion and of the Grand Trunk were realized in
the National Transcontinental. Increased urbanization[30] was the result
and in turn eastern agriculture shifted from an export to a domestic
industry. Exports of dairy products and of livestock declined steadily
in the first decade of the century. Production of butter and cheese for
export was displaced by the production of milk for domestic consumption.
Winter dairying expanded rapidly. The apple industry declined from the
standpoint of exports but increased from the standpoint of consumption
in Ontario and Western Canada. Lumbering was stimulated by the demands
of the construction industries. The embargo on exports of logs in 1898
hastened the growth of mills along the north shore of Georgian Bay. The
effects of the increase in wheat production were accentuated by other
developments. The railroad to Western Canada necessitated penetration of
the vast Precambrian area and led to the discovery and development of
the copper nickel mines at Sudbury. It provided a base at North Bay for
the construction of a railway supported by Toronto and government
auspices to open the clay belt to settlement. The Temiskaming and
Northern Ontario railway led to the discovery of silver at Cobalt, and
in turn of gold at Porcupine and Kirkland Lake, and of copper at Noranda
(Quebec). Settlement in the clay belt and the spruce forests of the area
north of the hardwood zone supported pulp and paper mills at Iroquois
Falls, Kapuskasing, and Smooth Rock Falls. The decline in importance of
pine in the region north of Georgian Bay and the embargo on the export
of pulpwood from Crown lands hastened the growth of mills at Sturgeon
Falls, Espanola, Sault Ste. Marie and in the vicinity of Fort William.
With the mining industry and the pulp and paper industry, towns came
into existence, agriculture was encouraged and the hydro-electric power
development advanced with amazing rapidity. Extension of the Temiskaming
and Northern Ontario railway to Moosonee was followed by the development
at Abitibi Canyon and the opening of the new north of Northern Ontario
facing on Hudson Bay.

    [Footnote 28: =Massey Harris--an historical sketch 1847-1920=
    (Toronto 1920).]

    [Footnote 29: W. J. Donald, =The Canadian iron and steel
    industry= (Boston 1915).]

    [Footnote 30: S. A. Cudmore, =Rural depopulation in Southern
    Ontario= (Toronto 1912).]

The advance of industrialism which followed the opening of the West and
of New Ontario was accomplished by the activity of the state and of
private enterprise. The rapidity of development, the long tradition of
state support dating to the French rgime and linked to the problem of
the Upper St. Lawrence waterways, and the relatively late development of
metropolitan areas as contrasted with Montreal were factors responsible
for the part of the government in the formation of the Ontario Hydro
Electric Power Commission and of the Temiskaming and Northern Ontario
Railway. The peculiarities of the economy of Ontario are deep rooted and
vitally related to her position as an outpost of the lower St. Lawrence.

The war period stimulated industrial growth and the post war period was
dominated by the enormous speculative boom of the United States and by
the later stages of the industrial revolution based on gasoline. Road
construction, automobile factories, the tourist trade, with hotel
construction and the decline of prohibition, were a phase of this
revolution. Again the state assumed a role of direct importance in
financing roads.

From this tentative outline we may venture to suggest the general
underlying factors of the economic history of Ontario. The difficulties
of the Upper St. Lawrence and the importance of fur as a staple of trade
with the hunting Indians of the northern forested Precambrian area were
responsible for the development of the Ottawa river as an eastern
boundary, and as a canoe route to the interior. Competition from New
York compelled the state to support ventures to the interior by the
Upper Great Lakes in the form of subsidized forts. The effectiveness of
this competition was evident in its contribution to the breakdown of
French control and in the consolidation against New York in the combined
effects of the activities of the British government, the importance of
British manufactures to the fur trade, and the combination of canoe and
lake navigation by the Ottawa and the St. Lawrence. Moreover it
eventually forced the fur trade to the Northwest and contributed to the
final adjustment of the boundary from Grand Portage along the main route
of the trade.[31] Competition from the Hudson's Bay Company through
Hudson Bay and its tributary rivers finally broke the control of the St.
Lawrence drainage basin to the interior. By 1821 the supremacy of Hudson
Bay had indicated roughly the north western boundary of Ontario.

    [Footnote 31: H. A. Innis, =Interrelations between the fur trade
    of Canada and the United States=, Mississippi Valley Historical
    Review, Vol. XX, 321-332.]

The determined efforts of the British government to maintain control
over the Upper lakes[32] was followed by the development of lumbering
and agriculture. The St. Lawrence and the Ottawa became ideal routes for
the export of square timber. The problem of control was temporarily
solved. Timber and an effective imperial policy involved settlement and
in turn the shift to wheat. The difficulties of the upper St. Lawrence
and of the Niagara River again became acute since wheat and an
agricultural population demanded cheap transportation for imports.
Competition from New York by Lake Ontario and by the Erie Canal again
accentuated the demands for state support which implied the Act of
Union, the building of canals, and the addition of railways. From this
background emerged the problem of fixed charges for transportation
improvements, the tariff for revenue and for protection, the demand for
larger capital imports, Confederation, the Intercolonial and Canadian
Pacific railways. The problems of the state in overcoming the
difficulties of the St. Lawrence were met by the activities of the state
in building and supporting a railway to western Canada.

    [Footnote 32: G. S. Graham, =British policy and Canada
    1774-1791= (London 1930).]

Confederation provided for release and continued expansion in the Upper
St. Lawrence area. The Toronto-Hamilton metropolitan area assumed
greater control with release from the out-grown clothes of Union.
Ontario was determined to secure a substantial share of the trade from
newly opened areas, and railways tapped the new transcontinental. She
gained appreciably from the similarity of her economy to that of the
newly opened West. Improved navigation in the form of deepened canals on
the St. Lawrence system and shorter railway lines to seaboard hastened
the expansion of the West and in turn of Ontario. Deepening of the St.
Lawrence ship channel to 30 feet by 1906, and of the St. Lawrence canal
to 14 feet by 1901 brought to successful completion the long and
determined struggle with New York. These improvements, the rise in
prices which began with the turn of the century, the migration of mature
technique from depleted resources in the United States to virgin
resources in terms of wheat, minerals, pulp and paper, and the growing
interdependence of these industries were factors supporting the
phenomenal boom from 1900 to 1914. Railways brought to the expanding
metropolitan area of Toronto and Hamilton the results of expansion in
minerals, pulp and paper, and hydro-electric power in Northern Ontario.

It is suggestive that the last new frontier was opened by the James Bay
railway in 1932. As a province, Ontario has gained enormously by the
expansion of the Dominion and has been quick to press for advantage, and
to undertake as government enterprises hydro-electric power and
railways. The Temiskaming and Northern Ontario railway, the Algoma
Central and other lines tapped directly the lines to Montreal and the
East. The disadvantages which arose with the dominance of water
transportation have been converted into advantages. Rapids and falls
have become sources of hydro-electric power. Competition of the New York
route has been converted to an advantage by the lower rates for Ontario
compelled by competition and water routes. The new staples pulp, paper,
and minerals have been linked to railways and the continental
development of the United States. The tapping of fresh resources has
brought problems of exhaustion and of conservation. Integration has
already brought its problems as shown in the establishment of the
Ontario Research Foundation. We can already see the effects of
competition in the pulp and paper industry. The uneven growth based on
sudden improvements in transportation and in exploitation of natural
resources will tend to be displaced by stability and increasing reliance
on diversification. Ontario combined the development of furs, minerals,
pulp and paper and lumbering, hydro-electric power and agriculture in
Northern Ontario with the development of wheat in the West. In turn
industrialism and agriculture in the south gained from the expansion and
from the possibilities of integration. The diversity of her geographic
background has provided for specialized production, cheap power and low
costs of transportation and the results have been evident in an
efficient balanced and relatively elastic economy.

The emergence of Ontario to maturity has brought problems for the
province as well as for the Dominion. The elasticity of the economy of
Ontario has been based on a wealth of developed natural resources and
has been obtained in part through inelastic developments[33] which bear
with undue weight on less favoured areas of the Dominion. The strength
of Ontario may emphasize the weakness of the federation. An empire has
its obligations as well as its opportunities.

    [Footnote 33: See D. A. MacGibbon, =Railway rates and the
    Canadian railway commission= (Boston 1917).]




TRANSCRIBER'S NOTES:

Pg. 112, "sub-artic" changed to "sub-arctic". (the sub-arctic forest
extending north)

Footnote 3, inserted missing period after abbreviation "ibid". (and of
fauna, =ibid. 1921=, 82-87.)

Footnote 5, period changed to comma. (Canadian Political Science
Association, 1931)

Pg. 113, added missing apostrophe to "tis". ('tis impossible to travel)

Pg. 113, added missing apostrophe to "em". (still out-number 'em.)

Footnote 9, spaced out the initials "M. I." to conform with style in
rest of text. (See M. I. Newbigin)

Footnote 10, added missing comma between journal name and volume number
to conform with style of rest of text. (Contributions to Canadian
economics, IV)

Footnote 11, "Historictl" changed to "Historical". (Ontario Historical
Society. Papers and records, Vol. XXIII)

Footnote 12, period after name of author changed to comma. (See W. S.
Wallace, =The United empire loyalists=)

Footnote 16, removed period between title of work and place/year of
publication to conform with style of rest of text. (=Select documents in
Canadian economic history 1783-1885= (Toronto 1933))

Footnote 16, bold print markup added to title of cited work to conform
with style in rest of text. Also period changed to comma between volume
number and page reference. There should possibly be a comma between the
title of the book and the roman numeral "II", but this is not a journal
and this style of specifying the second part or volume of a book is
plausible so the original text is preserved in this case. (=The John
Askin Papers II=, 343, 353,)

Footnote 16, added missing period at end of footnote ((Toronto, 1876).)

Footnote 19, bold print markup added to title of cited work to conform
with style in rest of text. (A. R. M. Lower, =Immigration and settlement
in Canada 1812-1820=.)

Footnote 19, added missing comma between journal name and volume number
to conform with style of rest of text. Also period changed to comma
between volume number and page reference. (Canadian Historical review,
III, 37-47;)

Pg. 117, removed extra period after footnote marker 22. (was built in
1822.[22])

Footnote 22, added missing comma between journal name and volume number.
Also period changed to comma between volume number and page reference.
(Ontario Historical Society, vol. XXIII, 370-383)

Footnote 23, period after journal name changed to comma. (Contributions
to Canadian economics, vol. VII.)

Footnote 24, bold print markup added to title of cited work to conform
with style in rest of text. (McDougall, =The Welland Canal to 1841=)




[End of _An Introduction to the Economic History of Ontario
from Outpost to Empire _ by Harold A. Innis]