The history of Canada and the Canadian economy traces back to the hunter-gather trade networks of Indigenous people in Canada. Furs, tools, decorative items, and other goods were often transported thousands of kilometres, mostly by canoe throughout the many rivers and lakes of the region. After European colonization, fisheries became the first major economic export in the region, followed by fur trade, and eventually mercantilism. Economic integration spread across the country with Western expansion, linking ten provinces and territories.
Studies of economic history in Canada is highly focused on economic geography, and for many years the dominant school of thought has been the staples thesis. This school of thought bases the study of the Canadian economy on the study of natural resources.
Fishing in Canada
Atlantic Fisheries The earliest European settlements in Canada were the fisheries of the East Coast, especially the Grand Banks off Newfoundland. Boats from France, Portugal, Spain, and Great Britain would traverse the Atlantic, fish for a summer and then return laden with fish. The trade was originally dominated by fishers from southern Europe. In Catholic countries, demand for fish was much greater. It was from the northern nations of Britain and France that the first settlers came, however. Spain, Portugal and the south of France had abundant supplies of salt because in the warm climates it was a simple matter to evaporate seawater. They would thus bring barrels of salt with them to the fishing grounds, salt the fish aboard ship, and return to Europe never having touched land. In the colder and wetter climate of the British Isles and northern France, salt was in scarce supply. To preserve the fish, they were dried by hanging them on large fish racks on the coast of Newfoundland and Nova Scotia. These drying stations were active for months of the year, and eventually permanent settlements grew up around them. These small settlements totaled only a few thousand people, but they were many of the first European arrivals in North AmericaJoseph Gough, Managing Canada's Fisheries: From Early Days to the Year 2000 (2007)
Pacific Fisheries Prior to European contact, First Nations people on the Pacific Coast would frequently trade salmon with First Nations people of the Canadian Prairies.N.D. Jarvis, "Curing and Canning of Fishery Products: A History," Marine Fisheries Review 50.4 (September 1998): 180–185. Shortly after European settlements had begun appearing in British Columbia in the mid 19th century, the first salmon canneries had begun appearing alongside them, the first being a salmon cannery in the Fraser river in 1867. The next forty years saw the salmon industry gradually become an increasingly lucrative trade in the pacific. Places such as the Fraser river and the Skeena river saw a sharp rise in immigration and the development of the fishing industry. With the outbreak of the Second World War came an increased demand for fishing industries of British Columbia to help relieve the war effort.Pacific Fisherman 1943 Yearbook (Seattle: Consolidated Pub. Co., 1943) The ten-year average for total cases of canned salmon in British Columbia from 1910 to 1942 was 1.6 million, while the Second World War's average alone was more than 2 million, with a peak of 2.25 million in 1942.Pacific Fisherman 1943 Yearbook (Seattle: Consolidated Pub. Co., 1943): 75.
Mercantilism and corporatism
Canada's economic development in colonial times was based on the economic policy of mercantilism. This economic idea sought to derive the maximum material benefit from the colony, for the homeland, with a minimum of imperial investment in the colony itself. The ideology was embodied in New France through the establishment under Royal Charter of a number of corporate trading monopolies including La Compagnie des Marchands, which operated from 1613 to 1621 and the Compagnie de Montmorency, from that date until 1627. It was in turn replaced by La Compagnie des Cent-Associés created in 1627, by the King of France, Louis XIII and the Communauté des habitants in 1643. These were the first corporations to operate in what is now Canada.
Staples thesis
Harold Innis (1894–1952), based in the history department at the University of Toronto, and William Archibald Mackintosh (1895–1970), based in the economics department at Queen's University developed the Staples thesis. They argued that the Canadian Economy (beyond the level of subsistence farming) was primarily based on exports of a series of staples—fish, fur, timber, wheat—that shipped to Britain and the British Empire. Industrialization came much later. The thesis explains Canadian economic development as a lateral, east–west conception of trade. Innis argued that Canada developed as it did because of the nature of its staple commodities: raw materials, such as fish, fur, lumber, agricultural products and minerals. This trading link cemented Canada's cultural links to Britain. The search for and exploitation of these staples led to the creation of institutions that defined the political culture of the nation and its regions. Innis, Influenced by the American historian Frederick Jackson Turner added a sociological dimension: different staples led to the emergence of regional economies (and societies) within Canada. For instance, the staple commodity in Atlantic Canada was cod fishing. This industry was very decentralized, but also very co-operative. In western Canada the central staple was wheat. Wheat farming was a very independent venture, which led to a history of distrust of government and corporations in that part of the country. (Also important, however, were the shocks caused by volatility in the market for wheat and by the weather itself on the growing season.) In Central Canada, the main staple was fur, and the fur trade dominated the economy for many years. This fur trade was controlled by large firms, such as the Hudson's Bay Company and thus produced the much more centralized, business-oriented society that today characterizes Montreal and Toronto.Trevor J. Barnes, "Industrial geography, institutional economics and Innis." in Trevor Barnes, Meric S Gertler eds., The new industrial geography: Regions, regulation and institutions (1999): 1–22.
Core-periphery model
Innis depicted the relationship between regions of Canada as one of "heartland" to "hinterland": The periphery, or hinterland, is dominated by the core, or heartland. Because the heartland was dependent upon the search for and accumulation of staples (which were located in the hinterland) to perpetuate the economy, it sought to gain economic and political power by exploiting the hinterland."Staples Theory" in Old Messengers, New Media: The Legacy of Innis and McLuhan, from Library and Archives Canada Historians continue to use elements of the Innis model, applying it for example to British Columbia. That province's economic structure exemplifies the "core-periphery" structure of intra-regional relationships. The core is metropolitan Vancouver, with its concentration of corporate management and transportation functions and manufacturing growth. It dominates an underdeveloped periphery that depends on production and export of staple commodities.Thomas A. Hutton, "The Innisian core-periphery revisited: Vancouver's changing relationships with British Columbia's staple economy." BC Studies: The British Columbian Quarterly 113 (1997): 69–100. online
Fur trade
The fur trade was key to the development of the Canadian interior. In Europe, hats from beaver pelts had become especially fashionable and valuable, and the forests of North America were home to many of the creatures.
This trade closely involved the Native peoples who would hunt the beavers and other animals and then sell their pelts to Europeans in exchange for guns, textiles, and luxury items like mirrors and beads. Those who traded with the Native were the voyageurs, woodsmen who travelled the length of North America to bring pelts to the ports of Montreal and Quebec City.Carolyn Podruchny, Making the Voyageur World: Travelers and Traders in the North American Fur Trade (2006)
The French dominated the trade through the New France, the Ohio Valley, and west into what would be Manitoba and Saskatchewan. In an attempt to break the French monopoly the English began trading through Hudson Bay and the Hudson's Bay Company built an elaborate network of trading posts and forts.
There was fierce rivalry between the French and English and their respective Native allies. Even when the two nations were at peace fierce fighting would occur in the interior.
The great disadvantage of the fur trade for the Canadians was that it did not encourage settlement. The fur trade only needed a few highly skilled workers. Also, the fur trade required more tonnage of goods to be shipped to North America than going the other way. This meant that there was no excess space on the westward voyage and passage costs were high. Unlike the United States where agriculture had become the primary industry, requiring a large labour force the population of what would be Canada remained very low.
This was a great benefit to the British in their struggles with the French. Over the course of the eighteenth century, the French possessions were gradually seized by the British until, in 1759, all of New France was conquered. The continued dependence on trade with Europe, also meant that the northern colonies were far more reluctant to join the American Revolution, and Canada thus remained loyal to the British crown.
Population history
The population has grown steadily from a few thousand in the 1660s, to one million in the 1820s, 10 million in the 1920s, and 30 million in 2001. Accurate census data begins in 1851; the older numbers are estimates by historians.Newfoundland is included starting in 1951. William L. Marr and Donald G. Paterson, Canada, an economic history (1980) p. 151
Year Populationin thousands Net growth rate immigration 1668 4 1685 10 5.4% 1713 19 2.3% 1763 65 2.5% 1790 192 4.0% 1806 473 5.6% 1831 1,124 3.5% 1851 2,436 3.9% 1861 3,230 2.8% 152 1871 3,689 1.3% −191 1881 4,325 1.6% −87 1891 4,883 1.2% −206 1901 5,371 1.0% −180 1911 7,207 2.9% 716 1921 8,788 2.0% 351 1931 10,377 1.7% 229 1941 11,507 1.0% −92 1951 14,009 2.0% 169 1961 18,238 2.6% 1081 1971 21,568 1.7% 724 1981 24,343 1.2% 853 1991 28,120 1.4% 2001 30,007 0.6% 2005 32,500 2.0%
Timber
In the early nineteenth century timber became the dominant staple commodity. Timber for the domestic market had long been a small industry in the colonies, but it was changes in Europe in the early nineteenth century that created a large export market. Great Britain had exhausted its supplies of quality timber by the start of the eighteenth century. The great oaks that had built the Royal Navy were all but gone. The lack of very large trees that could supply great masts was especially problematic as they were a necessity for both its war and merchant shipping. A thriving timber importing business had thus developed between Britain and the Baltic region. This trade was very unpopular for both economic and strategic reasons.Tim Ball, "Timber!", Beaver, April 987, Vol. 67#2 pp 45–56
For much of the eighteenth century, Britain had encouraged the timber trade with the New England colonies. The American stands of timber were primarily located along the small, but easily navigable rivers of New York and Massachusetts. These were fairly quickly exhausted. Even without the American Revolution new sources would have been needed by the start of the nineteenth century.