Marilyn Gerriets: Agricultural Resources and Economic Development at Confederation

OBJECTIVE:

The staples thesis argued that exports of wheat stimulated development of manufacturing in Ontario and that exports of fish and timber from other provinces discouraged economic diversification.[1] The argument implied that the concentration of manufacturing in a narrow corridor along the St. Lawrence River resulted from these regional differences in exports.[2] This interpretation of Canada’s development ignored regional variations in the ability to produce goods other than the staple products.[3] An alternative hypothesis is that the ability to produce a wide range of agricultural produce was crucial in stimulating economic diversification. Productive farms provided raw materials that manufacturing firms processed. At the same time the farms created domestic markets for the final output of these firms. As a result, rich agricultural resources increased the potential for manufacturing development. An early advantage in manufacturing was particularly beneficial. The more firms manufacturing in a district, the more attractive the district became to other firms producing inputs or purchasing outputs of the first firms. Infrastructure in finance and transportation and pools of labour, and capital were likely to emerge first in the districts which showed the earliest concentrations of manufacturing.

The objective of our project is to test this alternative hypothesis. First the association between agricultural resources and agricultural development will be determined. Then the incomes resulting from agricultural and other economic endeavours will be calculated and the size of markets in a given radius from urban centres will be calculated. The nature and scale of manufacturing industries will be compared to the size of the local market revealing the extent to which manufacturing emerged from production for domestic markets. Comparison of the response to the uneven endowment of agricultural resources across Canada may help in understanding differences in the foundations for modern manufacturing that had been laid in Ontario, Quebec, New Brunswick and Nova Scotia by the time of Confederation. The project clearly assumes that the environment strongly influenced the path of development, but the intent is to establish the context in which government policies, culture, entrepreneurship and other aspects of human agency influenced the evolution of Canada’s economy.

CONTEXT:

Economic historians have changed their understanding of the relationships between exports, the domestic market and economic growth in recent years. An examination of textbooks reveals that the staples thesis has gradually diminished in importance as an explanatory framework in Canadian economic history.[4] Douglas McCalla and Marvin McInnis have turned to the internal dynamics of the domestic market to explain the evolution of Ontario’s economy.[5] McInnis observed that Canada did not have net exports of wheat during the settlement of Ontario, and he noted that while wheat was the single most important crop in that province, it was only one of many crops. McCalla’s work has shown the importance of internal trade and the growth of the domestic market. Ian Drummond observed that Ontario’s manufacturing development largely served the province’s market.[6] In Quebec, one group of scholars has interpreted the cessation of wheat exports in the early 19th century as a sign of crisis while another argues that production shifted to a dynamic domestic market.[7]

Criticism of the staples thesis began earlier in the Maritimes than in Ontario. T.W. Acheson attacked the argument that poor staples doomed the region to poor development by showing that Maritime entrepreneurs successfully shifted from shipping and shipbuilding to industrial production for the domestic market in response to the National Policy tariffs.[8] A substantial literature emphasizes the impact of external capital and poor policy on the region’s development.[9] A number of scholars have refuted the view that agriculture in the Maritimes was hindered by cultural attitudes and the distraction of the staples trades. Instead they have presented an image of highly diversified agriculture.[10] Daniel Samson urges that work be undertaken to study the interaction between the rural and the urban, the agricultural and the industrial.[11] However, some recent work reiterates the argument that resource endowment and the nature of the region’s staples were important influences on the development of the Maritimes.[12] Nonetheless, Canadian economic historians increasingly stress the importance of the domestic market to development.

Hence this project will explore the role of the domestic market in Canadian economic development by undertaking an explicit study of the relationship between the distribution of economic activity and agricultural resources. Most settlers came to Canada hoping to develop farms which would provide a good income. Farming was by far the dominant economic activity in 1870 and agriculture provided more than half of Canada’s commodity income.[13] Naturally enough, immigrants preferred to settle on excellent farm land, so that districts with better land were more densely populated than districts with poor land.[14]

Good farm land was not the only determinant of settlement patterns; access to external markets was also attracted settlers. Although the output of farms, local shops and mills met a large portion of the needs of settlers, farmers desired imported goods. Cash was required to pay for land and to meet tax obligations. In some places, cash was raised and imports were purchased by selling wheat or timber in export markets. In others, farm produce was sold to the lumber camps or to fishermen, so that farmers exploited staples markets indirectly. In the absence of markets for staples, surpluses of beef, butter, eggs, oats, barley or potatoes were exported. The desire for the variety and quality of goods provided by imports meant that districts with good access to external markets were usually settled before districts with poor access. The districts which were settled first had an advantage in capturing the region’s manufacturing development. As a result, location with respect to external markets and the sequence in which districts were settled were important in determining the pattern of manufacturing development.

The first step to determining the relationship between agricultural resources and economic development must be a systematic comparison of the distribution of agricultural resources and agricultural development in 1870. The comparison will provide a useful contribution in itself by establishing the typical relationship between the resource base and agricultural activity. When the typical relationship is established, the atypical relationships can be identified. For example, recent research has indicated that agricultural development appeared to be slow along the upper Saint John River and in Caraquet on the Northumberland Strait.[15] In Cape Breton agriculture may have pressed too far, so that settlers struggled for survival on poor soils.[16] The results of the comparison may help determine whether the land tenure system in Prince Edward Island slowed agricultural development. In Quebec, the tendency to increase the production of animal products in the mid 19th century has been attributed to changes in markets. But population pressure forcing the improvement poor quality land that was best suited to pasture may also have had an influence. Previous research exploring the relationship between manufacturing development and agriculture was handicapped when improved acres were used as a proxy for good land.[17] The tendency of incomes to rise with population density appears to refute a Malthusian argument that population pressure reduced incomes.[18] However, if acres of good agricultural land, not total square miles, were used to measure population density, quite different conclusions might result.

The second step in this project examines the distribution of manufacturing activity in the ubiquitous small towns and villages of Canada in 1870. Farming families required lumber, flour, woolen clothing and blankets, shoes, harness and saddlery, wagons, furniture, pottery, stoves and kitchen utensils. [19] Their farms and wood lots provided many of the raw materials needed to produce these goods. The artisans and labourers processing their raw materials obtained their food from the local farms. This portion of the study will give a much better understanding of the rural economy and will assist in distinguishing the processing of staples for export from production for the domestic market.[20] Defining the nature of rural manufacturing is an essential step to establishing the hierarchy of manufacturing centres.

The hypothesized path of development extended beyond well-balanced communities where farmers produced for artisans while artisans met the needs of farmers. Where rich lands were extensive, these communities provided a good basis for further development. Productive and densely settled communities were better able to support improved roads, canals and railroads. As the market reached at reasonable transportation costs grew, firms took advantage of economies of scale.[21] Firms supplying producers goods could find a sufficiently large market to earn a profit, while the presence of suppliers of machines, boilers and engines increased the profitability of locating in the well developed area.[22] The earlier settled districts within a larger area had denser populations and provided more attractive locations for manufacturing than more recently settled districts. Their growth became cumulative, and the districts with the best developed manufacturing tended to attract further manufacturing development.[23] Gilmour has studied the changing distribution of different types of manufacturing activity in 19th century Ontario. This project will expand on his work by comparing manufacturing distribution to the distribution of agricultural lands and by comparing the distribution of manufacturing in the four provinces of Canada at Confederation.[24]

Not all manufacturing found in Canada at Confederation adhered to the pattern just described. Some manufacturing served external markets; the largest saw mills and flour mills processed staples for external markets; Maritimers built ships for export or to export shipping services.[25] Some firms manufacturing for large regional markets chose locations in small towns or villages, to gain access to water power.[26] A very important alternative to the pattern described above was the development of manufacturing where wages were low and where the owners of capital could easily oversee their investments, particularly around Montreal. The endowment of regions with water power and coal certainly influenced the types of industries which emerged if not the extent of industrialization.[27] An important task of this project is to compare the extent and types of manufacturing development which were associated with areas with good agricultural resources and with areas with poor resources.

The portion of the project described above will explore the relationship between agricultural and manufacturing development at the time of Confederation. When it is completed, the project will be extended to consider the changes through time in the distribution of manufacturing. Evidence of the censuses of 1880 will be used to trace the evolution of the distribution of agriculture and manufacturing in the maturing economy. Time will not permit completion of this stage during the three years of the project, but the way will have been prepared for future work examining the evolution of manufacturing in Canada’s regions during the last quarter of the 19th century.

METHODOLOGY:

This project requires completion of six steps. First, maps will be created reflecting the distribution of agricultural resources and other geographic features in 1870. Second, the census of 1871, supplemented by other historical sources, will be used to map the distribution of human settlement and economic activity. Third, incomes will be calculated, and their geographic distribution by census district will be mapped. Fourth, the hierarchy of manufacturing centres will be determined, that is places manufacturing primarily consumer goods will be distinguished from those with more specialized production. Fifth, statistical analysis will be carried out for comparison with the interpretation provided by visual inspection of the maps. Sixth, work will begin to extend the project to the 1880 census to begin exploring changes through time in manufacturing structure.

The first step is to map the variables to be studied in order to compare their geographic distribution. A geographic information system will provide the tools for mapping and will assist in spatial analysis. The Canada Land Inventory provides the results of soil surveys undertaken in the 1960s and 1970s. The purpose of the surveys was to classify land according to its productive capabilities and to estimate the extent and location of each class of land.[28] These surveys undertook systematic study of the climate, topography, depth of soil to bedrock, drainage, stoniness of the soil, the characteristics of the soil structure such as sandiness and many other factors. After collection of this data, an index was compiled indicating the suitability of the soil to agriculture. Soils which could support production of a wide range of crops with no limiting requirements for conservation practices received the highest rank, class one. Classes two to four had increasingly severe restrictions to the types of crops which could be grown. Class five lands were suited only to perennial forage crops, and class seven lands were unsuited to any form of agriculture. This ranking system is fortunate for this study. Today, soils which can produce only a highly specialized crop such as blueberries may be quite valuable, but they would have been of little use to a 19th century farmer. Lands with poor soils that were suitable for forage and pasture, but not for arable crops, would have required far more reliance on the market for subsistence than was generally practical in the conditions of the 19th century. This survey gives such lands a low rank.

Application of a soil ranking system designed for late 20th century agriculture to 19th century conditions causes some concerns. Soils may have changed in nature over time, and changes in technology may have altered the suitability of different soils to agriculture. The first concern seems less pressing than the second. Very few soils were downgraded for problems such as erosion which was likely to result from poor farming techniques. A very small percentage of soils were excluded because of urban development. Most soils receiving a poor ranking suffered from problems such as stoniness, drainage conditions, topography, depth to bedrock and similar problems which were unlikely to change through historic time. Changes in the technology of farming cause more concern. Poor drainage likely created more difficulties for early farmers than for modern farmers with far better access to the capital and technology required to improve drainage. Hilliness may have posed fewer problems for early farmers than for highly mechanized contemporary farmers, although flat land has always been better suited to agriculture than hilly land. To check on the results of the soil survey, comments of the first surveyors about the quality of the land they encountered will be compared to the results of the survey. Systematic differences in the rankings of different types of soil will be noted and considered in the analysis. However, it is expected that the modern survey will effectively distinguish between the poor backlands and the rich intervale lands of a place such as Middle River Cape Breton, and will compare the potential for agriculture of the intervale lands with the excellent farmland of south central Ontario.[29]

Other geographic features will be added to the maps. The presence of good harbours, navigable rivers, coal deposits, water power sites, seats of government and military bases stimulated economic activity.[30] To a large extent improvements in transportation were an endogenous response to a strong domestic market, but political factors played a very important role in many projects, so their impact must be carefully evaluated. Railroads and important politically motivated trunk roads such as Yonge and Dundas Streets will be added to the maps. An important task is provide the correct political boundaries for 1871. Serge Courville has kindly offered to provide digitized maps for Quebec. Digitized current civil maps will be adapted and corrected where historical digitized maps are not available.

In the second step, data provided by the 1871 census of Canada will be mapped as attributes of each census sub-district. This census is the first that provides comparable data for all the provinces which entered Confederation in 1867. (Prince Edward Island collected some comparable agricultural information which will be used, but the manufacturing data in its census is not comparable.) The survival of the manuscripts of the manufacturing portion of the census permits detailed study of the types of manufacturing found in each census sub-district. It is fortunate that this particular census is so well preserved. By 1870 immigration to Canada had ceased and emigration had begun. Almost all districts that ever developed agriculture in these provinces had been opened for settlement, although in many of the more recently settled areas the process of clearing land was far from complete.[31] While much manufacturing was dispersed in rural areas, the process of centralization within each province had begun.[32] Since the census reflects conditions shortly after 1867, it is well suited to addressing questions about the relative development of the Maritimes before the region entered Confederation.