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History of Canadian Business Course Notes all lectures.docx

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HIST 113
Catherine Briggs

General course themes 1) Role of gov/state - partnership of business and the state - political concerns not always allied with business 2) importance of “staples” or raw materials in business and history of Canada - business and economy basd on development and export of raw materials shaped issues ike technology, banking, social structure 3) more complex than “staples” thesis? - for example- industrialization - manufacturing hasn’t just purely come from explotation of raw materials 4) Importance of foreign or international business influences - dependence on forign business - forign ownership - “world economy” (trading to French empire, some of asia)- trade, capital flow, technology, ideas 5) importance of “entrepreneur? - entrepreneurial enterprise in canadas history? –fur trade, gold - limits to opportunity - climate, geography, population (smaller market, demand, skills in labor force) Fishing- The First Business “discovery” of north America Factors leading to European Exploration - growing power of kings (need to maintain the power, and protect it, and trying to generate wealth to help protect –gold, spices- ) , Build empires and claim land where its wealthy, pursuit of creating colonies - changes in business and trade activity - technology advances- old and new, move thru the world and acquiring these technologies such as shipping (3 mass ships instead on one mass) – latitude and longitude - commercial “revolution” – changes in commerce and trade, trade over wider range of products and further places around the world “matthe” – Cabot’s ship Leads to exploration , expansion, trade Discovery of fisheries of north America- Bristol fisherman(probably discovered) or john cabot(reported it to the king)? “newe founde launde” and the grand banks Fish- important resource to European society. Very profitable, fish is very popular for Europeans to eat, less costs than raising cattle Growth of fishing Nature of the business: - “free” enterprise – anybody can fish there for free, any country/person who wants to., no license’s or fees, - merchants (lenders/investors, captain) and fisherman(don’t get paid until the end, like profit sharing) - funding (multiple investors, over several ships, so it is a safer investment) Risk - merchants and investors - fisherman (theft, skills to run the ship) - pirates, and naval ships will steal from fishing ships including the fisherman and switch them to the navy instead - in the early 1600’s there started to be ship insurance - storms (1 in 50 don’t make it back from them) “wet” fishery - processing of the fish is done on the boat (cut of head and clean it) and hasn’t been dried yet, so more salt is needed Dry Fishery - becomes the dominant method - cheaper - on land almost like an assembly line, drying stages in the sun with salt (less) - nicer product to eat because less salt involved Nature of fish processing - fishing stage used to dry fishery ca. 1710, Frech woodcut, unknown artist Fishing and settlement - settlement and colonization - not nessesary for fishing trade! - Exploration continues for wealth (gold,silver). ex. Jacques cartier – travel inland using st Lawrence river - Factors leading to settlement in newfoundland – because it might be easily , more competition in the coves, protect and claim a cove, - Factors against settlement – monarchy sometimes didn’t allow it (kings/queen) , since it was free enterprise the investors didn’t want to invest in something - Ex Ferryland 1638 , liscense was given by English king, but was not allowed to interfere with fishing industry there The Fur Trade – early 1500’s-1800s Part One  Important Themes  Fur Trade Begins – Europeans arrive to fish on east coast, approached by natives who use furs and want to trade, natives wanted metal products like knives or pots,  Why Interest in Trading Furs? – valuable for clothing industry in Europe,  Little to no communication all around Canada, how can you trust someone?  Europeans Fashion –Beaver Felt Hats (most prized/valuable fur, waterproof and warm) Everyone wore hats back then and men didn’t leave the house without them, same with a lot of women, occupation/status figure  Native Peoples Initiated Trade – Why? – natives need metal, Natives are already used to trading Native NOT driven by wealth, must wanted necessities Wanted booze and guns, and glass beads  The Fur Trade  Fur Trade and Settlement in NA:   Settlement – Result of Goals of Kings  Partnership of Kings and Traders  The the early years they met just down the st lawernece river at Tadousac  First Settlements  Started claiming parts of N.A.  Pierre de Monts(financing, had a monopoly) – first settlement 1604 in bay of fundy nova scotia  Didn’t go right to plan, harsh winters, people didn’t respect the monopoly , natives didn’t care about monopoly and traded with whoever they wanted, brithish didn’t care about French monopoly, nobody could enforce it  Problems with Monopolies- kings gave monopolies to settlers because it was costly for new settlement areas with farming, shoemaking, blacksmith etc.  The Fur Trade  Native Role in Trade:  Native Trade Networks- already in place such as Tadousac,  Native Understanding of Trade- very good at trading, as well as economic concepts,  European Economic concepts – supply and demand was in place, played on pricing when demand was high, not enough furs, so native raised price on furs,  Native Economic concepts – wernt exploited , used to snow, snowshoes, able to survive on own, never viewed different land claims were where, and played off of French and british fighting, not interested in massive wealth  Partnerships were made, treat people fair with pricing or they will go elsewhere, gift giving,  Alcohol was needed in trade because people started to become dependant on them  Equitable trade relationship?  The Fur Trade  Fur Trade and Settlement Trade leads to Settlement Trade as Impediment to Settlement- less people to operate effectively, you don’t need tousands of people going over there Money to be made  Fur Trade and War Important Factor in Wars Natives sometimes helped in wars with trading partners  Growth of European Colonization - slowly  Trade = Military Alliances The Fur Trade  Competition Increase (mostly frech and british)  Royal Government in New France – colonized by french gov (king) , appoint gov offcials to represent him Attempt to Control Trade , tried to make it so you have to have a liscense, Aristocracy (government job) 1660s. on france, not engage in business or a job, usually born into it and allowed to use it if their favour, they invested in the fur trade anyways even though he wanted to diverse the economic jobs/base, king didn’t want to expand fur trade because they were relying on it too much  Fails – Fur Trade Expands  Leads to Further European Expansion in NA  1660s. Montreal is the new main trade hub  The Fur Trade  Formation of the Hudson’s Bay Company (used to be fur trading company) Radisson and Groseilliers (French fur traders) Arrested , no liscense They were shipping out of hudsons bay(north) instead of moving to the east coast, faster than bringing them to quebec Became a british company because they recognized his idea  English Royal Charter 1665  Competition for Bay Trade in Early Years  HBC Survives – Strengths?  Nature of Trade under HBC  HBC and Natives, HBC employees can only be on propery of HBC to trade and nothing else  Chief factor, junior factor, bookkeepers, kitchen workers and general laborers stay over the winter and engage in trade  British are dominant naval power and are very good operating ships and sailing  The Fur Trade  HBC Control trade through the Bay  French – St. Lawrence Trade  Trade and Competition Expands  Expansion and Exploration into Northwest (map 1740)  Defeat of French in 1760 Business in New France 1660-1760 Lecture Three History 113 French Colonial Policy  New France becomes a royal province 1663  Mercantilism : Economic Policy of European Powers Objective is to create a self-sufficient and wealthy empire Colonies are to supply raw materials to mother country and to act as a market for manufactured goods. Scramble to get as much wealth in the world because there is a limited amount In theory, if you have enough colonies, you have enough economic power to produce whatever you want and end up not being dependent on trade with hostile countries Colonies are not allowed to trade with any other part of the world unless it’s a French colony Impact on Economy and Business of New France  Retard Economic Development? Slow, never developed as it should have  More economically diverse  Colony becomes dependent on export of raw materials  Mercantilism never effectively implemented – appoints government officals to implement, hard to keep watch and are out for self interst, 8-9 months for a letter to get to someone  Lack of centralization/absolute power  (Louis XIV – picture)- excersice his power often, wouldn’t want to mess with him, not afraid Large, de-centralized imperial bureaucracy Impact on Business in New France  Colonial Officials Motivated by personal self-gain (wealth and status) –Not by Colony’s best interests Example: Louis Frontenac Lack an entrepreneurial spirit – why invest in the long run when fur trade can make a lo of money (british cared more about the colonies sake and not their own) , why invest in a brewery if a war happenes and it gets burned down?  Ongoing warfare stagnates economic development – france and britain  Contradictions in Imperial Policy – wants to grow and tries diversifying jobs, make ship building companies and breweries  New France is low priority in the Empire – costs money to run and defend  (Louis Frontenac with the Indians) – governor(highest position) lots of debt, partys with natives, helped expand fur trader  Trade Economy of NF  Export Trade Economy Develops  Fur trade dominates 70% of exports most years  Agriculture is dominant activity of many people  Small % of export income  New France dependent on France for many products  Deficit trade balance most years  Merchants of New France  Merchant communities/networks Inter-connected by ties of kinship  Import/Export Business  Example: Robert Dugard  Louisbourg Merchants  (Fort and Town of Louisbourg – Picture)  French Colonial Empire  Assessing Economic Development  Lack of Diversity and Reliance on Staples  Additional Factors (beyond Mercantilism):  Trade with Foreign Powers  Craft Production Banns on manufacturing goods  State also encouraged small manufacturing Example: Ship building  Assessing Economic Development  Lack of Manufacturing/Diversity  Additional Factors:  Lack of Skilled Craftsmen  Lack of Capital  Few Products could be manufactured competitively in environment of New France  Population of New France and British Colonies 1740  Assessing Economic Development  Agriculture  Major economic activity of people of NF 80% of population is rural  Importance of agricultural development and success Necessity for economic stability and for economic growth  Impediment: Seigneurial system Land holding and distribution system where farmers are tenants Stifles entrepreneurial enterprise The Fur Trade Part II – 1760-1860 Lecture Four History 113 The Fur Trade after 1760  Defeat of the French and the American Revolution  Changes in Balance of Power in NA  Impact on the Fur Trade: New Traders – Scottish, English, American French Canadiens in the Trade Fur trade expands into North west Increased competition  European Control in NA 1750 and 1775  North America 1783 The Fur Trade after 1790s  Competition and anarchy in NW  HBC monopoly  Cutthroat competition  Increased violence and anarchy  Response to Problems of Competition Expansion of fur trade Merger – Northwest Company 1779  Fur Trade Routes The North West Company  Operation of NWC:  Partnership – Montreal based Merchants  “Wintering” partners (trade in winter months)  annual salary based on profits for high up, workers get salary, offers incentive for bonuses  Annual Meeting (one big trade- furs for goods, recap on the year, festive activities,  Simon McTavish- initial partners who helped create NW company, after French were defeated, started trading in 1760, has a company located in London so has an important connection, had rep for richest man in montreal,  Alexander Mackenzie (picture)- works for NW company, his company was merged into NW company, he liked it better because less competition, made wintering partner, 1787 wintering in athabaska , skilled explorer with map making skills, idea to try and find a water route to pacific coast so they can ship over ocean to asia as well, not the greatest route though  Expansion and exploration HBC/NWC Rivalry  Competition Continues (starting to overhunt)  Further Expansion  Violence and Anarchy in NW  Selkirk Colony Founded by Lord Selkirk (HBC Investor) member of Scottish nobility Wanted to create a Scottish settlement/colony near winnipeg Located on trade routes of NWC, near metis, on two major riverways used in fur trade Battle of Seven Oaks 1816 , Selkirk was attacked,  Consolidation of NWC and HBC 1821, kept HBC name Fur Trade after 1821  Monopoly of HBC  Demand of furs going down  Consolidation and Re-structuring  George Simpson – restructured HBC, cuts down number of fur trading posts, lowers employees by over 50%, also cuts wages by 50% to increase profit. Drops price of value of furs from natives, so the natives have to give up more furs for a gun etc.  Competition and Illegal Trade – some metis were illegally trading, court finds them guilty but no fines, so illegal activities continue  Pacific Trade- in BC,  Expansion in to British Columbia  End of an (fur trade) Era Merchants, Timber, Resources – The Maritimes Lecture Five History 113 British defeated French in 1760- in 1870 canada became a nation and was not labeled as british  Economy/Business 1760-1860  Business after Britain assumes control  Main Points – Similarities and Differences?: Staple Extraction Dominates (wood, timber, sawmill, shipbuilding) Trade Economy Business Elite – Merchants – (minister, and finance ) Subsidiary Economic Activities (focused on trade and focus on staples, still rely on some imports) Lack of Industry and Diversification Trade Economy of Maritimes  Merchant Class:  Mercantilism continues  Maritimes – Trade within Empire  Business “elite” – Merchants  Characteristics of Merchants Permanent Insular Economic and Political Elite (also in government) Maritimes (new Brunswick, nova scotia) in a great geographical position for trade and living, especially for merchants who financed activities 1765, british kick out frech population into different colonies Lack of Industrialization?  “Arrested Transition”: (transition from solely trade based economy, to a more diversified industrial, “slower” than other colonies)  Historical Development and Geographical Position in the Empire (great depo for goods and trading, right on the water, they are also moving/shipping goods from other colonies)  Mercantilism (still a factor, further encourage importing and exporting, key staple products, mercantilism on the decline near early 1800’s) Economic Policy Changes? – free trade being implememted, leads to further diversification  Activities/Culture of the Elite (merchant elite runs the show, connected to government elite) Do not invest in industry – Why? (no, because it makes sense from a business perspective, not invest in manufacturing , but invest in shipping and ship making, ***banks to help pay for business activities as well as insurance for shipping, as well as harbors,  Locational/Resource Issues ( started more tariffs, Ontario and Quebec passed, but not elsewhere, ) Maritimes lack population, factor in investment decisions, not much excess money that the population has, another reason not to invest in manufacturing Areas of the Maritime Economy  “Wind, Wood, and Sail” (golden times, health economy)  Shipbuilding: Maritimes ships were great quality  Significant Industry, lots of merchants invest in shipping related activities  Merchants owned 66% of Maritimes shipping related/ports/ships  Result of the Trade/Merchant Economy  Does not facilitate subsidiary(related) industries (ships use metal and sails, ropes, different industries, they imported them instead of making it there)  Major economic output, second to timber  Construction of a ship in New Brunswick in 1875 Areas of the Maritime Economy  Timber Industry:  Major Export Product  Squared Timber and Lumber (staple product) – first industry after fishing because you need the timber to build the ships  British had a hard time finding trees, so turned to Canada/ Maritimes (new brunswicks staple product) and give them a policy that gives them preference on getting the trees from there  Sawmilling – cut it down smaller to make houses, and smaller parts of ships  Dominated by Merchant Elite – especially timber, had to have a license, only ones to have licenses in certain areas to cut the trees  Some smaller sawmills were owned by average people (2.5 people)  Manufacturing? Little manufacturing takes place slowly, tanneries, tailors, flourmills, but usually smaller operations run by average people. Areas of the Maritime Economy  Fishery: continues to develop and an staple product, export continues  Changes to Fishery by 19 C. – types of fishing where shipping crews were sent over for fishing season had slowed/stopped. Almost all of the fishing related stuff is permanent in the Maritimes  End of Migratory Fishery ^  Merchants and Planters (importers and exporters, not involved in fish production, import basic needs for fishermen, small family operations, salting done by fishermen but mostly female members of the family)  “Truck System” – (not to do with trucks, but a credit system that dominates fishing industry, merchants extend credit to fishers for new nets or food, under contract that the fishermen will sell all of their fish to the one merchant, if it’s a bad year, credit might be higher than the sale of fish, and merchants name the price and fishermen have little control, some poverty occurs because of it  Stifles Development of Fishery and Economic Diversification Areas of the Maritime Economy  Agriculture:  Over ½ of Population (are they producing a surplus?,  Importance of agriculture as an economic activity  Primarily Subsistent(producing enough for its familys needs and personal trading) or Self-Sufficient (more comfortable)  No Surplus – Export Economy  No Surplus – Support Diversification Farming and Resources Upper and Lower Canada Lecture Six History 113  Ontario and Quebec after 1760  Brief History from 1760-1870  Quebec (Lower Canada): French Canadien Population Growth of Agriculture and Timber  Ontario (Upper Canada): Formed after American Revolution Growth of Agriculture, Timber, Industry  BNA Colonies 1823 Merchant Economy  Merchants dominate a trade economy  Opportunity for merchant traders Removal of French and Military Economy  Example: George Allsopp (connections with military)  Example: Robert Hamilton and Richard Cartwright (combination of connections to government, hamilton was scottish, came to montreal as a clerk/apprentice, formed partnership with cartwright, who served in military and has connections with british. They both acquired lots of land/wealth and became the dominators of merchant trade. Timber Industry  Important Staple Export – due to ship building  Popular in Ontario and quebec  Operation of Timber Industry:  Timber industries usually done in winter months (because in the winter its easier to transport on water systems , easier to walk on snow with horse pulling a sleigh, store them by water ways then use the rivers and rafts to move them) hire men to live in cheap housing  Use st Lawrence river/rivers that flow into st Lawrence that leads to quebec  Have to get permission to use river ways  Exports of timber equaled exports of agriculture  Colonial Merchants – Invest in Trade and Production  Pioneer Entrepreneurs  Example: Philemon Wright, American, moved with friend settlers to hull/Ottawa, buys up farmland when its free/very cheap, recognizes how agriculture needed  Land was free for most ‘loyalists’ (who have fought with them in wars usually)  (Sawmill and tavern(also served food and rooms to rent for the night 1823)  Wright hired Timber Workers who were most imigrants or framers who have nothing to do in winter (250), 20 rafts a year for a big operation Sawmilling - Lumber  Industry develops around 1850  Free Trade (Britain & U.S.) 1854-1860’s  Upper Canada-U.S. Trade routes  Example: William Price, starts trading with navy, forms William Price CO, sells wood to the navy, employed over 1000 men, bought out many small sawmills and some he grows larger, dominates market in Saugany  Large impact of timber/lumber on economy – equal in exports to agriculture  Low wages, clear cuts trees (destructive)  Initiates economic growth and development Agriculture in Upper Canada  75% of population  Development of Farm Economy  Productive by 1830s, 1840s , Ontario/quebec farm economy starting to create a surplus  Land Shortages – most of the good land has been taken, starting to farm in huron, bruce, Muscoka  Land prices go up, some farmers take out mortgages to pay off farmland  Importance of Wheat/Effort? One of biggest exports  Profitable – Surplus (factors, quality of land, how early the farmer acquired the land, location to transportation)  Initiates Economic Growth and Development in 1850s, amount of wheat is enormous moving out of Canada  Mix farming, 80% was producing crops other than wheat, not dependent on wheat. Agriculture in Lower Canada (quebec)  Dominant economic activity  Subsistence – Unprofitable? – population increases dramatically= land shortage  They open up new areas to farm but the land is hard to grow on  Quebec farmers have additional costs like rent on land to grow crops =less wealth, less money to expand  “Crisis” by 1815  Wealth of Agriculture in Hands of the Elite, people starting to change from agriculture to other things Early Industrialization And Railroads Lecture Seven  Ontario and Quebec (1850-1870)  Industrialization: transition from commercial, export-oriented economy to a capitalist, industrial economy  Changes: Economic policies (dismantle policies encouraging mercantism) , Potential markets (manufacturing starts, trade begins with USA) Technological advancement (railroad, telegraphs) Banking began Industrialization - Ontario  Nature of industry: small shops, under-developed, handmade products, rural  Manufacturing: less export-oriented (saw mills for lumber for infrastructure)  1871: product diversity – almost meeting needs entirely, without importing  Example: 1831, Gooderham and Worts distillery, by 1860`s largest distillery in Canada (advantage: central accessible location, Toronto)  Why in Ontario? – success of agricultural economy for geographic reasons - Ontario introduced protective tariffs on local production - Railway development allows movement of goods and ppl - Kitchener: popular manufacturing community Strong agricultural base, on river system Skills of German immigrants and Mennonites Industrialization – Quebec  Development of small manufacturies , owned by merchant elite  Tariffs to protect production  Remove seigniorial system (too old-school, not modern)  Examples: John Molson (beer, banks, steamboat, new technologies) John Redpath (sugar, invested in infrastructure like canals)  Industries develop based on needs of Quebec people  Urban-centred, opposite of Ontario  Smaller production levels than Ontario Railroads  Importance: allowed for growth of businesses, was a business in itself People could visit family members Movement of goods regardless of weather  Supported by everyone, people, politicians, merchant elite, etc.  Expensive: financed by London financiers, merchant elite, bonds owned by citizens, not banks (too risky, no returns)  Guarantee Act 1849: - promotes investment in railways - Province guarantees interest and principle on half of all bonded debt of railroads  Government gets involved because it’s a public, not private, good  Covers southwest Ontario to American rail lines  Grand Trunk Railroad: proposed to link all British colonies together Too big, too expensive for original proposal Eventually connects most populated areas of On and Qu Reaches ocean at Portland, USA Financial disaster: required heavy state/provincial aid Business and the State 1867-1885 Lecture Eight History 113 Business and the State  Confederation (Canada or separate colonies were brought together into a nation) july 1st 1867 – Brought the British colonies in to a federation, as a new nation Goal was that Canada would eventually encompass all of British areas of NA Talks of combining with USA  Economic Goals – To create a national economic structure in which a nation could develop and stay stable, in vision potential economic opportunities , lots of potential in the west  “Partnership” of Business and the State Confederation and economic policies that followed seen as mutually beneficial, vast and dynamic economy  Canada 1867-1970 Business and Confederation  Railway Promoters/investors - envision a large nation connected by Rail  Supported/backed financially by Canada government  Railways were problematic/costly, don’t generate enough revenue and needs to be used more  West as a new agricultural frontier, lots of population growth  Trans-continental trade as they settle in the west  GTR (grand trunk railroad) – Promoters of Confederation to help generate more revenue and get out of financial problems, encourage more trade Trans-continental part of the confederation deal Economic Policy after 1867  Canadian government implements Nation-Building Policies 1867-1885  “National Policy” (three components, railway development, tariff policy, and western settlement/pop growth) – To unite and build the nation through economic goals  A) Railway Development:  Inter-Colonial Railway (government owned) – rail lines to connect to the Maritimes and Maritime ports, nova scotia and new Brunswick connected to Ontario and quebec, a main reason why the maritimes joined Canada/ supported confederation Support in Maritimes? Questionable from a business perspective (might cost too much, not much population in Maritimes, think its stupid financially) Completed in 1876 Also built if there was a war and had to transport troops fast because the roads were bad Railway Development  Trans-continental Railway:  Canadian Pacific Railroad – To unite the country physically and economically  Contract to build goes to Hugh Allan in partnership with US businessmen, lots of subsidies by the government  Friends with sir jon A Macdonald  CPR Scandal  Allen gave money to sir jon a macdonald to get the contract/for campaign Limits to business/government partnership, corruption Concepts of “conflict of interest” Railway Development  CPR:  CPR company headed by Donald Smith and George Stephen  Largest railway in the world, all along the south of ontario and southwest  Public/Private partnership  Necessity of Government aid (millions of dollars, as well as land)  The Last Spike 1885 (publicity photo taken for the last spike in railway to complete it, no chinese or black in the photo) Mountain Creek Bridge 1885 Tariffs  B) Tariffs – Second part of National Policy  Protective tariffs for manufactured goods introduced 1878  Idea of Tariffs (Goals)  Support and Opposition to tariffs Favours Central Canada Impact on Maritimes? – they don’t like them, they have an economy based on trade, based on shipping imports and exports Problematic, less trade, slow down economy, helps end the “golden age” Banking and Financial Services Late 19 Century Lecture Nine HIST 113 Exchange before banks  Variety of forms of money, farmers bartered, common currency needed  Bills of exchange were used (promissory note) by merchants in transactions  First bank: Montreal Bank (BMO today) 1817, merchant-driven  Chartered banks introduced: Government issued charters o By issuing charters to form banks, encouraging the founding of banks o Encouraged to improve the validity/availability of currency/credit  Risky operation of early banks (exchanged their currency for variety of foreign currencies in circulation) questionable value  Mix of American and British influences to develop banks  Currency was backed by gold/silver to ensure value  Denominated in dollars (American, not British): more likely to be doing business with US not Britain Problems  Number and Size of banks needed: o Banks localized based on clientele o Not wide-spread o If collapses, takes down local economy as well  Role of government in banking o Need for increased gov’t regulation to back/support/join banks  Bank Act 1871: sets the regulatory environment for banking o Increases reliability of banks o Subject for review every 10 years (audited) o Must meet minimum capital requirements (so banks don’t go under) o Must back their money with gold (credit issued is stable) Expansion and Characteristics  System of large chartered banks, but with many branches  Not necessarily new b
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