In 1922, standing on the campus of the University of Toronto, Harold Innis asked the question, What have been the very long run factors in the economic integration and independence of Canada? He asked this question in the inter bellum period in which Canada passed from the influence of Britain to the influence of the United States. He asked it when the Maritime Rights Movement, the Progressives on the Prairies, and the Partie National in Quebec were threatening to destabilize and regionalize the federation. His answer, pointing to the factors of unity and of separation from the United States, constituted the Staple Thesis of Canadian economic development. The Staple Thesis has formed the principal interpretive element in virtually all treatments of Canadian economic history since then. Innis was not alone in developing the Thesis, but for that very reason it came to be the `dominant paradigm'.
Since Innis' time the forces of disintegration within Canada, and the forces of integration within North America, have continued unabated. We have now come to a point at which national economic policy assumes and promotes integration with the United States, and regionalization has placed the federation under credible threat of dissolution. Innis' interpretation was correct, given his question. But, it is apparent now that another question needs to be asked; that is, What have been the very long run factors in the economic disintegration of Canada? Alternatively, another aspect of the current situation could be questioned; What have been the very long run factors in the integration of Canada into a common North American, if not a global, economy? What follows in this history is an answer to these questions.
Innis' question trained his eye on primary product exports and the transcontinental transportation and communication systems that served them. The question asked here trains our eyes on agriculture and manufacturing as they developed independently of primary product exports. Other than that, the answer to our question is history after the fashion of the German Historical School, as was history written by Innis, and by his student, W.T. Easterbrook.
The historical economics of the German School is complementary to neoclassical economics. Neoclassical economic theory deals with Alfred Marshall's `market', `short run', and `long run' periods. It assumes very long run factors to be fixed, that is unchanging. Economic history after the fashion of the German School focuses on consequences of the nature and evolution of very long run factors; that is, of values, institutions, geography, and technology. It focuses on the changing constraints within which the short and long run processes of Marshallian equilibration take place. These very long run factors have been the not altogether external determinants of the rise and decline of nations in general, and of the Canadian nation (nations?) in particular.
The time of Innis and Easterbrook is now two generations past. A revolution in historical method has displaced historical economics, and established quantitative history, called the New Economic History, as methodologically correct. Proceeding by way of the elaboration of models, usually neoclassical models, and statistical corroboration, the New Economic History has gone a long way in testing, and frequently rejecting, the constituent propositions of the Staple Thesis. But an hypothesis cannot be proven or disproved with quantitative methods. It can only be rejected in a particular test. And no hypothesis is replaced simply by being rejected in one or a few tests. An hypothesis is replaced only when another more powerful hypothesis is found. The New Economic History, using the methods of Statistics, is designed to test and reject hypotheses, not to generate them; and it has not performed well in the latter task. Because replacement of the Staple Thesis as an explanation of the substance of Canadian economic development is the goal of the present history, its method is not that of the New Economic History, but that of the historical economics of Innis and Easterbrook. Nonetheless, quantification and the conclusions of the New Economic History will be used at every possible point.
Because very long run factors affect economic activity on a global scale, Canadian economic development is a single case in a set of cases, some of which are like the Canadian case, some not. Accordingly, to better understand the consequences of the forces of history in the Canadian case, what follows contains considerable reference to Canada's sister transcontinental economies, the United States of America, and what was Tsarist Russia.
Finally, the following is an account of the rise and fall of national policy, from the Age of Sail, through the Canal Era, and the Railway Epoch, to the Time of Telematics, at the end of the Internal Combustion and Electric Dynamo Period. In a sense, what follows simply uses Canada as an example illustrating this process from the rise of the mercantilist nation state to the submergence of the transcontinental nation state in multinational trading blocks and global markets.
In its simplest form, the Staple Thesis is an assertion that Canada has grown on the forward and backward linkages of primary product exports. In the cases of fur, timber and wheat exports, the earlier east-west staple trades, growth was integrating. In the cases of fish, forest products other than square timber, and minerals, the later north-south staple trades, growth has been disintegrating. The thesis of the present history, the Distinct Regional Economies Hypothesis, is an assertion that the substance and character of the Canadian economy, over the long run, has been determined by the strength and structure of agriculture and manufacturing, quite apart from primary product exports; and that these, varying from region to region, have generated a disintegrated economy from the start.
The Staple Thesis explains the substance of Canadian economic development only in some of its regions, not in all; and particularly not in Ontario and Quebec where two thirds of the population resides. The influence of primary product exports is not absent in Ontario and Quebec, but the substance of their development cannot thereby be explained. During the period from Confederation to the First World War, the development of the whole of the Canadian economy may be recounted in relation to integrating primary product exports. That period, however, as Innis himself said, was aberrant. However overlaid by transcontinental, integrating, primary product exports, the substance of Canadian development has been, and, since 1930, has increasingly become continental and disintegrated. If southbound primary product exports have been a disintegrating factor in Canadian development in the twentieth century, they have not been the primary disintegrating factor. The Canadian economy has developed with the force of other more powerful disintegrating factors from its very beginning in the early seventeenth century.
From the very beginning, the strength of institutions, particularly institutions of land tenure, and the thrust of technological advance, have brought the Canadian economy to its present disintegration under the forces of regionalism and continentalism. What follows in this history is intended to show that this is the case.
There are, then, two things to be done. First, the very long run economic factors in the disintegration of Canada have to be exposed. Second, these factors have to be shown to be substantial, so that what is exposed can be seen to have sufficient importance to justify the question being asked. That is to say, the the task is to uncover the substance of economic growth and development, as such, in Euro-American civilization, and to show that the disintegrating factors in Canadian development and growth have been grounded in this substance.
In his classic work on the subject, The Wealth of Nations, Adam Smith asserted that the substance of economic growth is investment in ever more efficient means of production. In the beginning Canada was a frontier economy, a satellite, a spin-off from Europe and the United States. So, initially, the surplus for investment in Canada came from Europe and the United States. As frontiers of Europe, both New England and New France were constituted by people, organizations and activities transferred from Europe to America. In time, generation of economic surplus in Europe for investment in America was followed by generation of economic surplus in America for further investment in America, and by the formation of distinctive North American organizations and activities. In the beginning, however, the economic processes of America were the economic processes of Europe transplanted. It was Europe in America, and to understand economic growth in Europe, at that time, is to understand economic growth in America, at that time.
It is in the economic processes of early modern Europe that the answer to the question of disintegrating factors is first to be found.
My own HISTORY OF CANADIAN ECONOMIC THOUGHT [Routledge, London, 1991.] is not a bibliographic exercise. It is an attempt to let each generation of Canadians explain for itself what it thought it was doing with respect to economic development. Still, it is a book about books, and, so, has a heavy bibiliographic content. Writing this book generated the Distinctive Regional Economies Hypothesis of Canadian Economic Development. In addition, I have had published two reviews of texts on Canadian economic history in the CANADIAN JOURNAL OF ECONOMICS [vol.~15 (1982), pp.~180--184; and vol.~28 (1995), pp.~473--478.]. These reviews have bibliographic information. Extensive bibliographies can be found in a number of current texts: W.T. Easterbrook and H.J.G. Aitken, CANADIAN ECONOMIC HISTORY, Macmillan, Toronto, 1958; W.L. Marr and D.G. Paterson, CANADA: AN ECONOMIC HISTORY, Macmillan, Toronto, 1980; R. Pomfret, THE ECONOMIC DEVELOPMENT OF CANADA, (2nd ed.) Nelson, Toronto, 1993; and K. Norrie, and D. Owram, A HISTORY OF THE CANADIAN ECONOMY, (2nd ed.) Harcourt Brace Jovanovich, Toronto, 1996.]
There are, as well, a number of books of readings on Canadian economic history that contain extensive citations, particularly of journal materials: W.T. Easterbrook and M.H. Watkins (eds), APPROACHES TO CANADIAN ECONOMIC HISTORY, Carleton University Press, Ottawa, 1991; M.H. Watkins and H.M. Grant (eds), CANADIAN ECONOMIC HISTORY, Carleton University Press, Ottawa, 1993; D. McCalla (ed.), PERSPECTIVES ON CANADIAN ECONOMIC HISTORY, Copp Clark Pitman, Toronto, 1983; D. McCalla and M. Huberman (eds), PERSPECTIVES ON CANADIAN ECONOMIC HISTORY, Copp Clark Longman, Toronto, 1994; K. Inwood (ed.), FARM, FACTORY AND FORTUNE: NEW STUDIES IN THE HISTORY OF THE MARITIME PROVINCES, Acadiensis Press, Fredericton, 1993.].
The new field of Canadian Political Economy has benefited from several books of readings which, while more theoretical and policy oriented, contain interesting references to Canadian economic history: G. Laxer, (ed.) PERSPECTIVES ON CANADIAN ECONOMIC DEVELOPMENT: CLASS, STAPLES, GENDER AND ELITIES, Oxford University Press, Toronto, 1991; W. Clement and G. Williams (eds), THE NEW CANADIAN POLITICAL ECONOMY, McGill--Queen's University Press, Kingston and Montreal; D. Cameron, (ed.), EXPLORATIONS IN CANADIAN ECONOMIC HISTORY, University of Ottawa Press, Ottawa, 1985; and W. Clement and D. Drache (eds.) A PRACTICAL GUIDE TO CANADIAN POLITICAL ECONOMY, James Lorimer and Co., Toronto, 1978.
The field of Business History has recently come into its own in Canada. Much that is said there is of interest of students of general economic history, and, certainly, the bibliography sections of books in Business History are useful: M. Bliss, NORTHERN ENTERPRISE: FIVE CENTURIES OF CANADIAN BUSINESS, Mclelland and Stewart, Toronto, 1987; D. McCalla (ed.), THE DEVELOPMENT OF CANADIAN CAPITALISM, Copp Clark Pitman, Toronto, 1990; and G.D. Taylor and P.A. Baskerville, A CONCISE HISTORY OF BUSINESS IN CANADA, Oxford University Press, Toronto, 1994.
There are general bibliographical works on Canadian History that contain sections of interest to economic historians: J.L. Granatstein and P. Stevens, (eds.), CANADA SINCE 1867: A BIBLIOGRAPHICAL GUIDE, Hakkert, Toronto, 1974; J. Schultz (ed.), WRITING ABOUT CANADA: A HANDBOOK FOR MODERN CANADIAN HISTORY, Prentice Hall, Scarborough, 1990.
Finally, there are numerous general histories of Canada that contain excellent bibliographical material. They are too numerous to add to this already long list of sources. Still, Carl Berger's THE WRITING OF CANADIAN HISTORY, [an account of histories of Canada published by Oxford University Press, Toronto, 1976.] has to be mentioned.
This note is not intended to be exhaustive, but simply to offer the reader a different kind of guidance than is offered by the references appended to chapters in the present history.