Some Data on the Early Development of the
Montreal--Upper Canadian Economy

If you have questions or comments
e-mail: rneill@upei.ca

Introductory Comments

Given the softness of the following data, only order-of-magnitude conclusions are warranted, if that.

If the question is `Did Upper Canada grow on the basis of a wheat staple export?' the answer is a simple `Yes'. If the question is `To what extent did growth in the Upper Canadian economy depend on a wheat staple export?' the answer is much less simple. Wheat and flour exports were far from being the major source of foreign exchange in the province. Further, not all of the surplus needed for growth required the expenditure of foreign exchange, and not all imported goods were capital goods destined to generate growth. If the question is `Was Upper Canada a staple exporting economy?', again the answer is simple. `No.' When wheat exports fell off, after the 1860s, the provincial economy continued to grow, so, wheat and flour exports were only temporarily a basis of growth. They were part of a `kick-start' mechanism that launched an economy substantially based on something other than wheat or, probably, any other staple export.

Everything is perception, however, and there is no such thing as a theory-free fact.

Immigrants may have migrated to produce a wheat export. Any capital that came with them would then have to be attributed to the presence of a wheat staple export. Money sent to the Imperial army may have been spent on substantial quantities of wheat. Canals may have been built to transport wheat and flour to ports of exportation. In short, foreign exchange earned outside of wheat exports may have been so related to them that growth did depend largely on the staple. Still, the money spent on the most expensive canal, the Rideau, was nine-tenths unplanned, and the one-tenth that was planned was determined as much by military as commercial considerations. Settlers switched out of wheat farming as soon as frontier conditions passed, and the army purchased a great variety of goods and services.

The basic estimates of the components of the Montreal--Upper Canada economy are the following.

Wheat Exports: 1800--1840, Estimate One, Dollars and Bushels

         Year    Volume        Price    Value   

1800 184,000 1.80 331,200 1802 1,151,033 1.27 1,461,811 1812 415,303 1.27 575,411 1816 5,675 1.20 6,810 1817 335,895 1.20 403,074 1819 98,325 1.00 98,325 1822 383,658 0.50 101,829 1824 918,631 1.20 1,101,637 1829 99,377 1.20 119,252 1836 0 na 0 1837 0 na 0 1838 0 na 0 1839 0 na 0 1845 4,500,000 1.20 5,400,000 1856 12,000,000 2.40 28,800,000

Annual Average for Reported Years, 1800-1840: \$312.550.

Wheat Exports: 1800--1840, Estimate Two, Dollars
and Bushels

       Year      Volume    Price      Value

1800 184,000 1.80 311.200 1801 560,000 2.34 1,310,400 1802 620,000 1.19 737,800 1803 320,000 1.19 380,800 1804 160,000 1.19 190,400 1805 16,000 1.74 27,840 1806 80,000 1.55 124,000 1807 200,000 1.66 332,000 1808 160,000 1.74 288,400 1809 160,000 1.91 305,600 1810 192,000 2.13 408,960 1812 200,000 2.34 468,000 1819 808,000 1.00 808,000 1822 100,000 0.50 50.000 1823 16,000 1.20 19,200 1824 24,000 1.20 28,800 1825 816,000 1.20 979,200 1826 200,000 1.20 240,000 1827 480,000 1.20 576,000 1828 166,000 1.20 199,200 1829 24,000 1.20 28,000 1830 808,000 1.20 969,600 1831 1,760,000 1.20 2,112,000 1832 800,000 1.20 960,000 1833 784,000 1.20 940,800 1834 480,000 1.20 576,000 1835 64,000 0.90 76,800 1836 24,000 1.20 28,800 1837 16,000 1.20 19,200 1838 40,000 1.20 48,000 1839 32,000 1.20 38,400 1840 1,200,000 1.20 1,440,000

Annual Average for Reported Years, 1800--1840: \$406,297.

Wheat Exports: 1800--1840, Estimate Three. (bushels, dollars)

        Year      volume      Price      Value
 

1800 317,000 1.80 570,600 1801 660,000 2.34 1,544,400 1802 1,151,003 1.19 1,369,693 1803 438,052 1.19 521,282 1804 270,378 1.19 321,750 1805 114,966 1.74 200.041 1806 151,894 1.55 235,435 1807 333,753 1.66 554,029 1808 399,168 1.74 694,552 1809 295,849 1.91 565,072 1810 233,495 2.13 497,344 1811 97,553 2.13 297,788 1812 451,303 2.34 1,056,049 1819 98,325 1.00 98,325 1822 383,520 0.50 191,760 1823 535,760 1.20 642,912 1824 214,901 1.20 257,881 1825 918,031 1.20 1,101,637 1826 396,835 1.20 476,202 1827 661,535 1.20 793,842 1828 296,314 1.20 355,577 1829 99,377 1.20 119,252 1830 948,826 1.20 1,138,591 1838 296,620 1.20 353,944 1839 249,471 1.20 299,355 1840 1,739,119 1.20 2,086,942

Annual Average for Reported Years, 1800--1840: $625,164.

Annual Cost of Imperial Troops in Canada: 1800--1840

        Year     Cost (dollars)

1800 1,105,000 1804 433,500 1919 739,500 1835 306,000 1838 1,657,000 ------------------ 1844 2,299,250 1848 2,110,448 1858 1,109,250 1860 705,000 1862 3,132,250 1863 3,051,500 1865 2,643,500 1866 3,672,000 1867 3,982,250

Average Annual Cost for Reported Years. 1800--1840: $848,300.

The Imperial government also paid the salaries of civil servants, through most of the Canal Era. It paid indemnities to the Loyalists, estimated at three million pounds. It spent five hundred thousand pounds on naval vessels on the Great Lakes, presumably in addition to the annual cost of troops.

Settler's Capital: Average Annual Flow

 
      Years        Number of Settlers    Capital (dollars)

1790--1806 3,324 212.726 1807--1814 1,125 72,000 1815--1824 2,840 181,760 1825--1831 8,371 535,744 1832--1840 15,111 967,104 1841 12,100 780,800 1842 20,600 659,200 1843--1851 38,000 1,216,000 1852--1861 17,740 567,680

Annual Average Inflow of Capital, 1800--1840: $403,104l.

External Capital Invested in Canals and Railways (dollars)

      Canal       Years        Investment

Lachine 1824 42,500 Rideau 1826--1834 4,250,000 Welland 1826--1833 500,000 St. Lawrence 1842--1849 6,375,000 ------------------------------------ Railways 1849--1859 100,000,000 ------------------------------------

Annual Average, Canals, 1824--1834: $479,250.

Annual Average, Canals, 1842--1849: $910,714.

Annual Average, Railways, 1849--1859: $10,000,000.

Dollar Value of Pine Exports from Quebec

        Year      Value

1810 531,000 1815 187,000 1820 425,000 1825 595,000 1830 850,000 1835 1,562,000 1840 1,785,000 1845 2,380,000 1850 2,125,000

Value of Lumber and Timber to Value of All Exports

      Year     Ratio

1830 .50 1835 .75 1840 .60 1845 na 1850 .45 1855 .35 1860 .35 1865 .30

Making the Estimates

In calculating these series, pounds had to be converted into dollars. Following information in Adam Shortt (1987, pp. 389, 489, et al), one pound sterling was valued at $4.25. In fact, however, the official value of the pound changed over the period, and the market value was not always the official value.

The price of wheat was estimated at Montreal, at times using prices prevailing in other centers. Prices varied unpredictably between Liverpool, Montreal, Kingston and Niagara. Variation depended on the flow of information, local variation in harvests, available alternative markets, the interruptions of war, and transportation costs. None of the series from which the estimates were made was complete for the whole 40 years. Estimate One was drawn from Jones and McCalla (1983.). Estimate Two was drawn from McCalla (1983.), and Marr and Paterson (pp. 91--93.). Estimate Three, using prices from Estimate Two, and exports of wheat, from Innis and Lower (p. 265.), includes exports of flour translated by the formula: one barrel of flour equals five bushels of wheat. Estimates outside the 1800--1840 period were drawn from Norrie and Owram. In Norrie and Owram, and in Jones the information used was found scattered throughout the texts. A formula for translating quarters into bushels, eight bushels per quarter, was taken from Easterbrook and Aitken (p. 281.).

Estimates of investment in canals and railways was drawn from Easterbrook and Aitken (pp. 258--271.), and from Shortt (1914, p. 299.).

Annual immigration was estimate using population figures from Marr and Paterson (p. 291.), and an estimate of the rate of natural increase found in McCalla (1983, p. 291.). Estimates of capital brought in by immigrants was based on a formula found in Easterbrook and Aitken (p. 274.), 15 pounds per person. This was reduced by one half for the years after 1840, on the assumption that the Irish immigrating after that date were relatively poor.

Annual expenditures of the Empire to garrison Upper Canada were drawn from estimates scattered liberally through McCalla (1983.) and Stacey.

There do not appear to be any estimates of total value of exports from Upper Canada and/or Lower Canada for the period 1800--1840. [If the conclusion that wheat was not the staple export is thereby invalidated, so is the conclusion that it was.] There are estimates of the value of exports of pine from Quebec City. Lower also reports that lumber and timber exports were about 60% of all exports by value, between 1835 and 1840. He does not report the source of this estimate. Because timber exports grew from next to insignificance in 1800, we may estimate that, on average, over 1800--1840, they were in the order-of-magnitude of 40% of all exports by value. But we do not have estimates of total value of exports.

Wheat and flour were exported, and so were furs, until 1822, though the furs would have come largely from the North West Territories, not from Upper Canada. Potash, barley, butter, eggs, horses and other stock, and fowl were exported. Let us say on average, these other exports were one half of wheat and flour exports. Can we then say that exports were constituted, by order-of-magnitude measure, 30% to 40% wheat and flour, 40% to 50% timber and lumber, and 20% to 30% other exports? Can we not generate order-of-magnitude estimates of total value of exports by this means?

[New time series for the Upper Canadian economy (McCalla, 1993.) have appeared since the present calculations were made. They do not contradict the `ball park' conclusions drawn here.]

The Structure of the Montreal--Upper Canada Economy

Assume that Montreal, the Eastern Townships, and Upper Canada constitute the relevant economic unit, and that the seigneuries constituted a distinguishable, more self-sufficient unit. Assume that the timber trade had a more direct effect on the non-seigneurial unit. Finally, assume heroically, to give the Staple Thesis as much latitude as possible, that all growth in the measurable market economy occurred by way of imported capital goods, and that all foreign exchange, however, gained, was expended on such goods. With these assumptions, using the order-of-magnitude estimates, we can construct a model that can be used to represent the nature and development in the Montreal--Upper Canadian economy, between 1800 and 1840.

Between 1790 and 1806, the compound annual growth rate (g) of output in this economy was 0.06. Assuming this to be the rate in 1806, the saving to income ratio, that is the ratio of total exports to output, (s) was 0.26, and the capital to output ratio (v) was 4.3. This forms the growth equation

g = s/v

or, in numerical values, for 1770--1806,

0.066 = 0.26/4.3

By a similar procedure for the period 1807 to 1831, and for
1831 in particular.

0.08 = 0.084/1.05

For 1832 to 1851, and 1851 in particular p

0.09 = 0.11/1.2.

Gallman estimates the investment to output ratio for the United States, between 1834 and 1843, to be 0.12 (p. 11.). This is not far from the estimate for Montreal--Upper Canada, in 1831 and 1851. The savings to output ratio of 0.26, in 1806, seems out of line. Lissawski suggests capital-output ratios of from 0.05 to 2 for American and European industry after 1880. The comparison is strained, but 1.05 and 1.2, for 1831 and 1851 in Montreal--Upper Canada, seem reasonable. The Capital to output ratio for Montreal--Upper Canada, in 1806, is large because it has been derived from a high savings to income ratio. If the growth rate had been 0.12, the capital-output ratio would have been about 2. The problem may be too high an estimate of market output in 1790.

On the whole, admitting the heroic nature of the exercise, and its marked bias in favour of the Staple Thesis, there is nothing here that is bizarre. We may conclude that wheat and flour exports accounted for about 50% of growth in the Montreal--Upper Canadian economy in the first decade of the nineteenth century, about 25% from the mid twenties to the mid thirties, and about 20% in the fourth decade. Wheat and flour were a significant, though declining, factor in the development and growth of the Montreal--Upper Canadian economy, in the first half of the Canal Era. Their importance did not distinguish this economy from the economy of the adjacent United States.

References

Easterbrook, W.T., 1958 (and H.G.J. Aitken),
Canadian Economic History, Macmillan, Toronto.

Gallman, R.E., 1966, `Gross National Product in the United States,
1834--1909', in Output, Employment, and
Productivity in the United States after 1800
, vol.~30 of Studies in Income and Wealth,
National Bureau of Economic Research, New York, pp.~3--115.

Green, A.G., 1971, Regional Aspects of Canada's Economic Growth
University of Toronto Press, Toronto.

Holland J.R. (ed.), 1940, Cambridge History of the British Empire,
Cambridge University Press, Cambridge. <>p Innis, H.A., 1933, (and A.R.M. Lower) Select Documents in
Canadian Economic History: 1783--1885
, vol.~2, Toronto.

Jones, R.L., 1946, History of Agriculture in Ontario, 1613--1880
University of Toronto Press, Toronto.

Lissowski, W., 1965, Capital-Output-Employment Ratios in
Industrial Programming
, Appendix 1, Pergamon Press, New York.

Lower, A.R.M., 1973, Great Britain's Woodyard, McGill-Queen's, Kingston and Montreal.

Marr, W.L., 1980, (and D.G. Paterson) Canada: an
Economic History
, Macmillan, Toronto.

McCalla, D., 1983, `The Loyalist Economy of Upper Canada',
1784--1806', Social History, vol.~16, pp.~279--304.

1993, The Planting of the Province,
University of Toronto Press, Toronto.

Norrie, K., 1991, (and D. Owram) A History of the
Canadian Economy
, Harcourt Brace Jovanovich, Toronto.

Pomfret, R., 1993, The Economic Development of Canada,
Methuen, Toronto.

Shortt, A., 1914, `Railroad Construction and National Prosperity:
an Historic Parallel', Proceedings and
Transactions of the Royal Society of Canada
,
ser.~3, sec.~II, vol.~8, pp. 295--308.

1987, Adam Shortt's History of Canadian Currency
and Banking
, Canadian Bankers Association, Toronto.

Stacey, C.P., 1963, Canada and the British Empire, 1846--1871,
University of Toronto Press, Toronto.