Between 1900 and 1912 the Canadian economy grew at an unprecedented rate. Although there was a brief downturn in 1907 and a more ominous one in 1913, the demands of the war revived economic activity, ensuring growth and prosperity until the beginning of the 1920s. The boom years before the war were financed by a combination of large-scale foreign investment and the successful overseas sale of wheat, Canada’s newest staple. Indeed, it is not too much to say, while noting the irony, that The emerging industrial and urban society was founded on the success of the wheat economy. The prosperity of the Canadian economy as a whole was, of course, dependent upon a world economic environment that provided funds for investment and markets for exports.
The changes in the international economic climate from which Canada benefited were the increased interest of British investors in overseas capital exports, the expanding demand from industrialized countries for Canada’s natural resources and food products, and the closing of the American agricultural frontier, which made Canada more appealing to prospective settlers. On the investment side, British and other foreign capital imports into Canada quadrupled between 1901 and 1921, reaching nearly five billion dollars. Since this investment, which made Canadian expansion possible, took place at a time when world prices, especially for agricultural produce, were rising and Canadian exports exceeded imports, the bal-ance-of-payments problem remained under control, at least until 1913. After that date the drying up of overseas investment capital led to an economic downturn, the seriousness of which was evident in 1914 but the outbreak of war once again increased demands for Canadian goods. But the post-war years quickly revealed the weaknesses in Canada’s economy, particularly its dependence upon foreign capital and foreign markets.
In the pre-war years increased foreign investment was accompanied by a rapid growth in overseas demand for Canadian products. And this demand coincided with technological and transportation changes—especially declining ocean-freight rates—which increased the availability of Canadian natural resources and agricultural products. A rapidly expanding railway system, new mining technology, improvements in farm machinery, and the development of hardier, high-yield grains, all ensured that Canadian products were available as demand grew. So, too, increased exploitation of such traditional energy sources as coal and, more significantly, the harnessing of the new and abundant source of hydroelectricity, gave manufacturers an opportunity to increase output and meet the demands of a growing, protected, domestic market. Population growth, fed by the large-scale influx of people from Great Britain, the continent, and the United States, provided a mobile, often cheap labour force, an army of agricultural pioneers, and a ready market for domestic production.
Perhaps the most striking fact about the growth of Canadian overseas trade was the changing character of exports. At the end of the nineteenth century Canadian
The McLaughlin carriagemakers first fought the challenge of the automobile with aggressive advertising. But the popularity of the auto, and the introduction of new technologies and the assembly line, meant that even McLaughlin finally had to turn to manufacturing the new vehicle. The company sold out to General Motors in 1918.
Forests and sawmills provided the leading export goods. Ontario, Quebec, and New Brunswick were the principal sources of these products. Cheese from Ontario and fish from the Maritimes and British Columbia, followed by cattle, barley, nickel, coal, fruit, and furs, filled out the list. By 1900 this pattern was already changing as prairie wheat began to assume the leading place on the roster. The value of wheat and wheat-flour exports rose from $14 million in 1900 to $279 million in 1920. Britain and Europe were by far the largest customers. Export of pulp and paper, mainly for the U. S. market, developed more slowly but bounded forward after the United States abolished all duties in 1911. Wheat, lumber, and fish were now joined by a growing trade in base metals, mainly from British Columbia and northern Ontario. A new export, revealing the beginning of another innovation in transportation, was the automobile. By 1920 Canada was exporting $18 million worth of cars and trucks. The car, like such other manufactured exports as rubber products, leather goods, and farm machinery, came from Ontario.
Here was evidence that Confederation’s promise of a national economy was coming to fruition. At its centre was the prairie West which not only produced the grain exports that fuelled the entire economy, but also provided much of the home market for industrial production. Moreover, the West’s transportation requirements revealed the need for a vast extension of the country’s railway network. After 1903, the Canadian Northern, the Grand Trunk, and the National Transcontinental were all given public financial support for new construction. Canadian railway lines grew from 29,000 kilometres (18,000 miles) in 1900 to 63,000 kilometres (39,000 miles) in 1920. As events were to prove, this expansion was excessive and ill-conceived. But during the boom years railway construction stimulated coal and iron mining, steel production, and the manufacture of rolling stock. All these activities encouraged spinOfFs in harbour and canal improvements, expansion of such public utilities as street railways and electric-power facilities, roads, public buildings, and home construction. Whatever the social and economic costs of this largely unplanned and uncontrolled burst of economic expansion, it was what underlay the materialism, optimism, and nationalism of the first two decades of the century. And in this age wheat was king.
The successful exploitation of the agricultural potential of the Canadian West, and its ability to attract settlers eager to participate in the adventure, depended upon the success of scientific and technological developments. The relatively short growing season, shorter as the agricultural frontier moved north towards Peace River, required the development of improved, short-maturing varieties of wheat. Red Fife, introduced at the turn of the century, began a chain of developments that shortened the growing season and increased the yield. In 1911 Marquis became available, while Garnet and Reward were developed to meet the conditions of the northern prairies. Rust, limited rainfall, and grasshoppers remained difficulties for the future, ones which often exceeded the ingenuity of science.
From the earliest years of prairie settlement low and unreliable levels of rainfall had been recognized as a serious problem. The lands of the Palliser Triangle, on the south Saskatchewan-Alberta border, could be farmed profitably only in years of high precipitation. In Alberta, irrigation introduced by Mormon settlers from the United States solved part of the problem, while other lands were left for ranching. In the wheat-growing areas the technique of “dry farming,” practised in the American West and improved by agricultural scientists at Indian Head, Saskatchewan, used fallowing, crop rotation, and shallow cultivation as means of conserving moisture. Such practices necessitated large-scale farming, with acreage far exceeding holdings in eastern Canada. These farms required improvements in agricultural machinery, many of which came from the United States, and also from such Canadian companies as Massey-Harris. Chilled-steel ploughs and mechanical reapers were followed by steam-driven threshing machines and, at the outbreak of the Great War, by the gasoline tractor. While increased mechanization reduced manpower requirements, agriculture continued to employ the largest percentage of workers of any industry: in 1921, 37 per cent of the labour force remained in agriculture, while only 19 per cent was employed in manufacturing.
Nevertheless, western wheat farming, even in the years before 1921, was at best precarious, at worst a gamble. Given the varieties of soil, extremes of temperature, and unreliability of rainfall, it is hardly surprising to find yields varying from nine bushels to twenty-five bushels per acre in Saskatchewan. While Number 1 Northern wheat, the top grade, fetched high prices, there were years when as much as 90 per cent of the crop was graded Number 3. To that were added the fluctuations of prices set on the so-called free market by speculation carried on through the Winnipeg Grain Exchange. The farmer also found himself subject to what appeared to him to be the arbitrary freight-rate structure, the whim of the railways, the power of the grain-buying companies, and, not least of all, a protective tariff which increased prices on everything from his ploughs to his children’s clothing. What began as stoic complaints against the elements and the “Interests” gradually became the platform for an agrarian protest movement that would explode after the Great War.
Though economic growth was general between 1900 and 1921, it was far from evenly spread over all the regions. Ontario and Quebec, the most heavily populated areas and those where industrial development was already well under way when the century opened, received about 80 per cent of new investment in industry and hydro expansion. The smallest amount of industrial investment, not surprisingly, went to the prairie provinces. But the Maritimes, where such industries as ship building, textiles, and coal mining were already established, obtained only about 10 per cent of new industrial and hydro investment. Moreover, such established maritime industries as textiles and coal were increasingly drawn into the national economy, first by investments and then by takeovers by Montreal businesses. As national freight-rate structures came to be applied across the country, the maritime manufacturers, who were distant from their markets, found competition increasingly difficult. The economies of Nova Scotia and New Brunswick, which did not share fully in pre-war expansion, would find the post-war years even more difficult. As the difficulties of the coal and steel industries indicated, the maritime economy continued the decline that had begun in the mid-nineteenth century. By the 1920s maritimers, like westerners, began to express serious dissatisfaction with the manner in which national economic policies seemed to favour the central provinces over the regions.
World History
