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Lecture 6

Lecture 6--The Entrepreneur in Canadian Business History new.doc

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York University
MGMT 1030
Frank Miller

The Entrepreneur in Canadian Business History MGMT 1030 Schulich School of Business The Staples Economy and Entrepreneurship in New France 1) Economic Climate of New France - In a lot of early business history, there was little entrepreneurial activity in New France - Scope for entrepreneurial activity limited by small population and administrated structure - Colonial officials appointed, opportunity to exploit problems in society and get influx of economic activity  Quebec founded in 1608  New France ceded to Britain in 1763  French colonies dependent on the fur trade and farming  70% of all exports were furs in 1739  Little industry in evidence  Seigneurial system prevalent  Limited population base  55,000 residents by 1755  Rigid administrative structure  New France reorganized as a Crown Colony in 1663  Mercantile system designed to benefit France  Colonial officials appointed 2) Entrepreneurial Activity: François-Étienne Cugnet (1688-1751) - Francois is an elite: comes from successful French family, father is academic, extremely well-connected in government and business circles - Cugnet given role of tremendous authority to command a company that controls trade in New France - Wanted to diversify; started to grow tobacco in New France; Canadian tobacco was not that good - Then wanted to domesticate buffalo; harder to domesticate than cattle/herds and hard time convincing people to eat it - Then wanted to make glue - Known for beginning a campaign within New France to make iron goods within the colony; can meet needs of colony without depending on others and provide metal to government of France in times of war - It takes time and is expensive to take iron out; kept going to government of France to loan him more and more money - He cut his losses and still had many people; he would have to report to the government and other directors, but it was expected that something of this nature; messing with the books would take place  Member of an established French family  Arrived in New France in 1719  Director of the Domaine d’Occident controlling imports and exports  Prominent lawyer  Wide interest in small commercial ventures  Tobacco exports, buffalo domestication, glue manufacturing  Invested heavily in the Saint-Maurice ironworks from 1729-1741  Inflated expectations of potential profits  Relied on state funds and loans to cover increasing debt  Declared bankruptcy in 1741  Small colonial economy and government connections allowed Cugnet to succeed Entrepreneurship during the First Industrial Revolution 1) Economic Climate of Upper Canada (Canada West), 1841-1867 - Upper Canada is a colony, its purpose is to serve the mother country; governor was responsible of king/queen - Voting in Canada took place based on who had land, in Canada land was being distributed so a lot people were able to vote - The government began to subsidize creation of railways, it became a question of life and death  Period of rapid growth  Population increase from 456,000 in 1841 to 1.4 million in 1861  Gradual attainment Responsible Government  Elected officials began to control economic policy  Government leaders intimately connected with and part of the business community  Legislation favored railway development  Guarantee Act (1849)  Municipal Loan Fund (1852)  Relationship between the state and entrepreneurial promoters marked the First Industrial Revolution, particularly in the railway sector 2) Entrepreneurial Activity: Samuel Zimmerman (1815-1857) - Zimmerman came of Upper Canada on great infrastructure projects going on at that time - Established himself as a contractor; hired people to be on his crew and gained contracts - Developed political connections around Welland and Toronto, got contracts to build parts of Great Western Railway o Zimmerman rented at least three apartments, used them to entertain political leaders - Zimmerman bought lots of plots around Niagara falls and built hotels on them  Born poor in Pennsylvania  Arrived in Upper Canada in 1842 and established himself as a contractor on the Welland Canal  Developed extensive political connections and received contracts for constructing the Great Western Railroad  Dominated railway promotion and construction relying extensively on public money  Methods considered unethical by today’s business standards common in his time period  Died, ironically, in a railway accident  Wide interests in other businesses  Principal landowner and developer of Niagara Falls  Bank owner  Reputed to be the richest man in Canada  Political and economic climate of Upper Canada allowed entrepreneurs like Zimmerman who cultivated networks and aggressively promoted their interests to succeed Entrepreneurship during the Second Industrial Revolution 1) Economic Climate of Canada, 1890-1930 - As financial sectors matures, bigger and bigger pools of capital available, less need for government to finance projects - Financial institutions wanted the general population to store and borrow money  Maturation of heavy industry and manufacturing in the Canadian economy  Value of iron and steel products increased from $56 million in 1890 to $435 million in 1929  Value of textile products increased from $26 million in 1890 to $173 million in 1929  Maturation of Canadian financial sector  Movement away from heavy reliance on government financing for industry  Chartered bank deposits increased from $1.1 billion in 1913 to $2.3 billion in 1929  Changing nature of the labour force  Non-agricultural component of the workforce increased from 54% in 1891 to 71% in 1931  Urban dwellers increased from 31% of population in 1891 to 54% of population in 1931  Growth of immigrant presence in workforce  Italian component of population increased from 1,849 persons in 1881 to 98,173 persons in 1931  Scandinavian component of population increased from 5,223 persons in 1981 to 2
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