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Brock University (12,137)
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ECON 2P19 (11)
Lecture

Chapter 8.docx

4 Pages
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Department
Economics
Course Code
ECON 2P19
Professor
Indra Hardeen

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Chapter 8 – Adjustment to the End of Mercantilism Timber • At the time of Confederation, wood exports in value terms two and one-half times greater than they were in 1850 • Three types of wood exports: squared timber, deals, which were thick planks of fairly highly quality in terms of both material and manufacture, and planks and boards • It is also important to distinguish the two export markets for Canadian products in this period: Britain and the United States • An export trade in deals required two prior developments: sawmills capable of meeting the relatively strict quality requirements, and a means to transport the product to tidewater, because unlike squared timber, deals could not simply be floated downriver • The colonies were blessed with abundant fast-flowing rivers, so a power source was no problem • Small mills catering to local demand had been a feature of the timber industry from the beginning, and they served as a source of skilled labour • The Ottawa River became the centre of the deals industry, with additional capacity in New Brunswick and along St. Lawrence River to Lake Ontario • Steam power, together with the railway, freed the industry from its locational dependence on river sites • Several factors are clearly important for the activity’s survival after the tariff cuts in 1842, however • First, differential duties were reduced in 1842 but not completely removed until 1860 • North American timber enjoyed preferential treatment in Britain for nearly two decades after the initial cuts, albeit at a decreasing rate • Second, ocean freight rates on British North American timber were falling in this period, a development of particular importance to this relatively high-bulk, low value product • Third, British timber demand was generally high in the 1850s and 1860s as a result of booms in building and shipbuilding • Another reason for the survival and growth of Canada’s forest industry after the loss of preferential treatment in the British market was the American demand for forest products • The emergence of the United States as an alternative market was clearly an important reason for the survival and growth of the Canadian industry • The lumber trade with the United States developed in this period for a number of reasons • The U.S. economy was growing rapidly, as was the urban population, so the demand for lumber was expanding • As saw-milling technology improved, they were able transport costs • As with deals, steam-powered mills and railways freed the industry from its locational dependence on river systems Wheat • Exports of wheat from Ontario continued to grow after 1846, due to a generally buoyant international economy • After a slight downward slump in 1846-47, wheat exports recovered • At the beginning of the decade, Canada West exported approximately 4.3 million bushels of wheat • A decade later, the figure had increased to 11.1 million bushels, or 61 bushels for every man, woman, and child in the province • The actual process of harvesting grain had changed little in the past century • It was slow, labour-intensive, and severely limiting to the size of farming operations • These implements reduced the time and labour necessary to cut the crop • With the development of the self-rake reaper by the 1860s, another tedious step in the harvesting process was made more efficient • By 1871, nearly 37,00 mowers and reapers were operating in Ontario alone • The removal of the Corn Laws had little effect on Canada’s ability to compete in British markets, and apparently, on the return to Ontario farmers from wheat relative to other products • The domestic demand for fruit and vegetables, dairy products, and meat increased as population and income grew • Demand for these products was growing in the United States as well, and here, reciprocity and the U.S. Civil War deflected some of this demand north of the border • The advent of railways brought transport costs on these products down, and hence farm-gate prices up, increasing the attraction of this market The St. Lawrence-Great Lakes Carrying Trade • American wheat could come into Canada without significant duty, but American flour could not • It benefited Americans to ship their wheat to Canada and have it ground into flour • With the opening of the British wheat market to all nations on an equal basis, Canada found itself with far too much flour milling capacity • From the resulting bankruptcies, a ripple effect occurred, as workers were let go, banks declared loans to be in default, and carters and haulers found their business with the mills down drastically • They had to adjust to the passage of the Drawback Acts by the United States in 1845 and 1846 • These acts permitted goods in transit through the United States to be carried in bond • Canadian wholesalers purchasing from Britain, and Canadian farmers exporting their product, could look to either the St. Lawrence or the American systems for the best rates • In such an open competition, the A
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