British Columbia's history is sprinkled with interesting, if not patently deviant personalities. The province's politics are lively. Nonetheless, there is nothing in its economic history to generate excitement or special curiosity, with perhaps one exception. The exception is this: it is difficult to understand, in the context of its persistent reliance on primary product exports to offshore markets, what economic factors could have been at work in bringing the region into Confederation.
The Port of British Columbia benefits from its position as the point of contact between the Pacific rim and the rest of Canada. During the Wheat Boom on the Prairies, the West Coast participated in the effects of frontier investment. More recently, it has drawn the Prairies into its acquiring of primary products for export. There have been some economic benefits from Confederation. At the time of Confederation, however, these eventualities were not matters of consideration. On the whole, economic factors in West Coast development have been factors in the disintegration of Canada.
On both coasts there were passing flirtations with, or ineffectual aspirations to, balanced growth; though this was more marked in the Maritimes. In British Columbia, from 1866 to 1873, when the Fraser Gold Rush was over and the possibilities for fishing and lumbering were not yet clearly perceived, there was talk of tariffs: of agricultural protection, even industrial protection. For a brief moment, just before Confederation, British Columbia, like the Maritimes, seemed to have economic aspirations similar to those of central British North America. By 1875, perceptions changed, but the choice had been made, as the choice had been made for Nova Scotia. British Columbia was part of the Canadian federation.
There are marked dissimilarities between West Coast development and development in the rest of Canada. The West Coast grew up different from francophone Canada, where agricultural development was not (substantially) auxiliary to the fur trade. The formal structure of West Coast property rights was late, Second Empire, British attenuated feudalism. It was similar to the structure of property rights in Upper Canada and Nova Scotia. Its Britishness, however, was not that of the Loyalists who migrated to the Maritimes and to Upper Canada from the United States. Its principal immigrant groups were native British, and English-speaking Canadian; and they were Victorian, rather than colonial Georgian, as in the Maritimes. Agriculture, the main business of Upper Canada, was not the main business of the West Coast. The West Coast shared the East Coast's reliance on primary product exports, but it was not a carbon copy of the Maritime economy. Its aspirations to balanced growth lasted six years, instead of six decades, as in Nova Scotia. Its development as a resource exporting, maritime region was shaped by the Hudson Bay Company monopoly, in the Age of Sail, and by the Canadian Pacific Railway, in the Railway Epoch. It was characterized by the heavy overhead costs of long term, continental (overland ) development, as opposed to the short term, maritime, commercial development of the Age of Sail on the East Coast. It was part of the growing Pacific economy, whereas the Maritimes was part of the relatively declining Atlantic economy.
During the North West and, subsequently, the Hudson's Bay Company's domination of trade in the Oregon, joint occupation between the United States and Britain permitted a build up of settlers whose preference was for United States citizenship. Following the Oregon Boundary Settlement of 1846, the Company was legislated out of the territory. By 1849, Victoria, on Vancouver Island, had become the Company's principal supply depot and organizational center on the west coast.
Ten years later, in 1858, the Fraser Gold Rush brought another group of intruders into the Company's territory. Moving inland along the rivers, the Rush of placer mining lasted until 1866. Thereafter individual gold seekers turned to other activities, or migrated north towards the Yukon finds of the late 1880s. Heavily capitalized gold mining companies, using steam operated dredges, continued to operate in British Columbia for another twenty five years.
The end of the Fraser Rush was contemporary with Confederation in the eastern British North America. In 1869, following hard on the United States' purchase of Alaska, the Imperial Government recommended that Canada acquire the Hudson's Bay Company's lands on the Prairies. This it did; leaving one, last, large territorial issue to be settled in North America: the allegiance of British Columbia. Under directives from the British Colonial Office, a second colony had been established on the mainland, in 1858. Financial problems in both colonies, following the end of the Gold Rush, and further Colonial Office directives, led to Maritime Union of the two colonies, in 1866. Still further pressure from the Colonial Office, and Canada's promise of transcontinental railway and telegraph lines, brought British Columbia into the Canadian federation, in 1871.
From Confederation until 1881, when confidence that the promised Canadian Pacific Railway would be built finally took hold, British Columbia experienced financial difficulties. Completion of the C.P.R. in 1885, and its extension to the new terminal port of Vancouver in 1887, coincided with economic revival.
The overall structure of the [British Columbian] economy in the years prior to Confederation was obviously one based on a gold staple with small but significant beginnings in coal, lumber and fishing as export industries and with subsidiary but important agricultural industry partially provisioning the staple industries. The fur trade was still an appreciable export item while manufacturing, excluding shipbuilding, was dominated by the processing of lumber for export, for capital [equipment] for both the gold staple and other industries and commercial and residential construction, and by flour milling and preparation of beer and spirits for local residents (Ormsby, 1958.).
Settlers, independent of the Company, arrived in Old Oregon from Red River in 1841. Thereafter Oregon was settled from the United States. In 1849, the Company received a proprietorial grant of Vancouver Island. In return it was to pay an annual quit-rent of seven shillings, and to establish a colony of settlers from Britain or from a British possession within five years. In general, the settlers who came out were competent peasants (farmers) who, it was presumed, would replicate on the west coast of British North America the countryside of contemporary Victorian England. Their first cash crops were sold directly to the Company, or to coasting vessels servicing the fur trade.
Discovery of gold on the Fraser, in 1858, gave a considerable boost to agriculture in the vicinity Victoria, New Westminster on the lower Fraser, and Yale at the head of navigation on the Fraser. Ranches and grist mills in the Okanagan also felt the new demand as agriculture expanded in response to new developments in staple exports. Expansion was not fundamentally agricultural. It was fundamentally dependent on primary product exports. Between 1860 and 1864, only 450 settler's holdings were pre-empted on the lower Fraser River, and all were oriented to steam transport on the river and interior trails to the diggings. Discovery of gold on the Cariboo, in 1862, further encouraged this dependent type of settlement in the interior.
With the end of the Gold Rush, in 1866, the character of agricultural development appeared to change. Stranded miners took to the land even as the market for produce shrank. The united colony of British Columbia, depressed by the failure of its recently dominant staple export, consciously turned to agricultural protection in the hope of generating an alternative economic base. Following Confederation, in 1871, the province undertook a grid survey of the Lower Mainland. In 1874, it adopted the free homestead system used by the United States and Canada to encourage settlement of the central plain. In 1878, Sumas Lake was drained and consequent vacant land was turned over to homesteaders. Still, agricultural settlement remained slow in comparison with subsequent expansion of forest exploitation, and of mining in the Interior. Even after the Federal government, administering the land grants associated with building the C.P.R., directed immigrant farmers to the province, other sectors clearly led in the region's economic growth.
As early as 1835, the inland routes opened by the fur traders were traversed regularly by pack horses. In 1838, to overcome difficulties created by sand bars on the lower Fraser, the Company located its trail-end depot on Vancouver Island. After 1858, spurred by the Gold Rush, steam navigation moved inland up the Fraser. Roads were built into the Kootenays and the Cariboo country. In 1863, Governor Douglas proposed a road to Red River. During negotiations preceding British Columbia's entrance into Confederation, Canada proposed a transcontinental railway. The latter proposal was accepted as part of the Confederation deal. The promised railway was not completed until 1885.
As part of a projected Siberian telegraph connection between the United States and Europe, a telegraph line was extended to British Columbia from Seattle, in 1864. Successful laying of trans-Atlantic cables aborted the Siberean project. A telegraph connection between British Columbia and the rest of Canada came with the completion of the C.P.R.
Although in some ways a final westward expansion of eastern North American operations, the West Coast fur trade had distinctive characteristics. Early Imperial trade in furs on the West Coast was controlled from Asia by the British East India Company. As a result of unrestrained, competitive harvesting on the part of United States, Russian, and British traders, Sea Otter stocks were depleted by 1835, and that particular trade came to an end. In the interior of the continent depletion of the common property resource was slowed by the monopoly positions of the North West and the Hudson's Bay Companies. There was, at once, less competition and a different kind of interaction between traders on the West Coast. In the early years of the trade, 1778--1813, the North West Company, not yet amalgamated with the Hudson's Bay Company, operated through the agency of J. and T.H. Perkins of Boston. The American Fur Trading Company, at first partly owned by Montreal interests, eventually sold its operations on the Columbia River (back) to the North West Company.
Differences notwithstanding, the characteristics of the continental trade were evident on the West Coast. When it absorbed the North West Company, in 1821, the Hudson's Bay Company came into sole possession of all of western British North America, including the Pacific coast trade. Further, typical of the continental trade, expansion of United States interests forced the Hudson's Bay Company to move its operations north of the 49th parallel. Having trapped out and been evicted from Old Oregon, the Company centered its operations on Vancouver Island, where it continued to monopolize an overland trade in furs, and carried on a coastal trade in provisions and lumber.
The trade in lumber grew sporadically after 1824, when the Company sent a cargo of lumber to the Sandwich Islands. Like West Coast furs, West Coast lumber found its earliest markets in off-shore ports. The California Gold Rush drew attention to the possibilities of coastal trade, but, even in the 1860s, the Company's largest Pacific markets were French, Spanish and Sardinian colonies in the Pacific, and ports on the Asian Pacific coast.
Organization of forestry on the West Coast was influenced by contemporary technology, and by the unique geography of the region. In 1854, the Muir family set up a steam powered lumber mill near Victoria. In 1861, a second steam powered mill was set up at Port Alberni. The use of ocean-going steam tugs to drag logs over large distances made it possible to invest in heavily capitalized, power driven mills in locations suited to shipping. Processing and shipping were separated from the harvesting frontier, and became economically viable well beyond the time when immediate supplies of wood were exhausted. In British Columbia, the forest products industry did not migrate with the geographical forestry frontier, as they had in south central and south western Ontario, before 1860; and they were not a preliminary to agricultural development, as they had been there.
With the rest of North America, the West Coast experienced prosperity in the 1850s, and relative depression in the 1860s. The Gold Rush, the Crimean War, and a railway boom in America and Europe fuelled general expansion, in the 1850s. Prices for lumber soared. New mills were were set up on Burrard Inlet on the Mainland. The American Civil War notwithstanding, markets collapsed in 1862. The end of the Fraser Gold Rush, in 1866, restricted credit, and added to the debt problems of the more highly capitalized mills.
Little has been recorded of the earliest developments in fishing. The Hudson's Bay Company is reported to have sent a ship load of salmon to California in 1824. In the 1860s, canning of fish was started in a successful attempt to overcome the great distances to large markets. West Coast fishing operations entailed relatively heavy capitalization almost from the beginning.
Mining and metal exports started with coal. There are records of the use of Vancouver Island coal deposits for fuelling steam vessels as early as 1836. By 1850, United States steamers on regular mail routes were using Vancouver Island coal. Permanent mines at Nanimo date from 1851. From that year, until displaced by fuel oil from California itself, coal was exported down the coast to industrial, transportation, and domestic users in the United States.
The Gold Rush began with the discovery of easily accessed deposits in sandbars at the mouth of the Thompson River. In 1858, 450 miners arrived in Victoria from California, most of them European, and most with their own capital. Diggings moved inland in a series of minor rushes. Transport lines lengthened. Working the deposits eventually required dredges and shafts. In time, individual miners were forced out into farming, road building, and trading. By 1866, the Rush was over on the coast. Placer mining ended in the Kootanys in the 1870s. General mining in the interior came with the advance of a second mining frontier from Spokane in the 1880s.
Prior to the Gold Rush, Victoria had a population of 400. It was designated capital of the colony of Vancouver Island in 1849, and it retained its political and commercial dominance, and its importance as a shipping center, until the arrival of the C.P.R. on the mainland coast. During the Gold Rush, Victoria's land prices soared, and business developed to supply the miners. At the peak of the Rush, its population was 20,000. By 1867, its population had fallen back to 3,000.
New Westminster, a small center serving the beginnings of agriculture on the Lower Mainland, was designated capital of the new colony of British Columbia in 1860. Its population was dominated by Canadians and Nova Scotians. Its concern was commercial rivalry with Victoria; and it complained bitterly that Victoria was a free port while it was not. New Westminster's growth was buttressed by the growth of lumber milling at Port Moody, which was close by on Burrard Inlet. In its search for a suitable terminus, the Canadian Pacific Railway bypassed New Westminster, which was not on a harbour, and it bypassed Port Moody, where land prices had been driven up by speculators. The miniscule center of Granville, subsequently renamed Vancouver, was chosen in their place.
During the Rush, the fiscal burden of public services mounted rapidly. Road building, maintenance of law and order, postal service, and land surveys were pressed ahead on a lavish scale, given the size of the colony, the difficult terrain, and the resources available to pay for the services. Revenues came from land sales, from the Mainland tariff until union, from the British Columbia tariff thereafter, and from licences sold to miners. All of these sources were uncertain due to avoidance and the fragility of the economy. Repeated appeals to the Crown for grants received a meager response, and debts mounted. Development of the public finances paralleled development in the private sector, where the arrival of heavily capitalized resource processing also generated a demand for long term loans.
Three banks opened on the West Coast during the Gold Rush: the Bank of British North America, the Bank of British Columbia, both owned in Britain, and a locally owned institution, Macdonald's Bank. The British banks return a profit to their owners by servicing the diggings, and purchasing gold. Otherwise, they did not accommodate development of the local economy. The locally owned bank failed, in 1864, following a robbery.
The question is, then, how was it that, between 1866 and 1874, four regional economies, one of them British Columbia, so different from one another, from an economic point of view, took political steps toward membership in a common continental economy? Specifically, what were the elements in the economy of the West Coast that validated the thrust of Imperial policy towards Confederation?
In one of its formulations the question is, how was it that two economies, one on each coast, relying on staple exports, and not having the kind of development that characterized the Canal Era in Montreal-Ontario, saw that their future could be fulfilled in acceptance of the kinds of developmental policies that would grow out of Montreal-Ontario's more balanced growth? The Maritimes, in the perspective of Charles Tupper, accepted Confederation in a bid to achieve balanced growth. Perceiving the Maritimes to have the iron and coal that the Canadas did not have, Tupper's faction hoped that its region would be home to the industrial sector of the new continental economy. Its bid was rejected by history, and regionalist sentiment, exploiting `inequitable' elements in its relationship with the federation, have dominated its politics ever since. But what, if anything, from the point of view of economic development, induced British Columbia to join? By what blip or reverse in the very long run economic factors in the development of the West Coast economy was it induced to run with Imperial policy, and enter into union with the Canadas?
Looking to the encroaching spirit of the U.S. I think it is of importance to strengthen the British hold upon the territory now assigned to us by encouraging the settlement upon it of British subjects ... (Ireland, p.~113.).} Impressed, on the one hand, by Wakefield's ideas on the role of land sales in the economic development of colonies, and faced, on the other hand, by the real in situ power of the Company, Grey eventually decided to use the Company as a settlement agent, while sending out a Governor who would act, independently, as an agent of the Crown.
The arrangement was less than successful. Within a year the practically powerless Governor resigned in frustration. Many of the settlers abandoned the colony for the gold fields of California, or for free land on the United States frontier. The Company, being more interested in controlling settlement than in fostering it, kept the price of land high. In the end, the chief agent of the Company was appointed Governor of the colony, and Company officials acquired large holdings of arable land. They became a colonial elite, a coterie of privileged proprietors, similar to the Family Compact and the Chateau Clique in the Canadas.
The general situation resolved itself in a way that permits the usual sort of nineteenth century Whig interpretation of events. Settlers accused the Company of creating local shortages of supplies, particularly of lumber, in its search for larger profits on mining frontiers, and in urban centers in the United States. They accused the Company of neglecting schools and roads. Cobdenites in England responded to these complaints by instructing Douglas to establish a Legislative Assembly; which he did, in 1858. In 1859, in the midst of the Gold Rush, the Nova Scotian disciple and emulator of Joseph Howe, Amor de Cosmos, arrived. Hardly pausing to unpack, he began publication of The British Colonist, a newspaper dedicated to doing on Vancouver Island what Joseph Howe had done in achieving responsible government in Nova Scotia. Whatever the disintegration of the British North American colonies from an economic point of view, from a political point of view, as particular cases in the evolution of democracy in the British Empire, they exhibited significant integration.
Events tumbled over one another. The mainland colony of British Columbia came into existence, in 1858, under Douglas' administration. Its first laws levied tariffs on goods entering the colony, in part to minimize United States influences, in part to raise revenue for the building of roads. After setting up an Executive Council of the sort that had governed the other British North American colonies before they achieved responsible government, Douglas withdrew in favour of a newly appointed Governor from England.
The new Governor arrived in 1864, just in time to read the first issues of John Robson's The British Columbian. Robson's newspaper was dedicated to doing on the Mainland what Amor de Cosmos's British Colonist was doing on the Island. What the Governor read, however, included news items covering the first signs of the end of the Rush. The Governor, himself, came to the colony with the mind set of Britain twenty years after the termination of the Second Empire. He came from an information environment in which laissez-faire and Little Englandism had standing. His attitude, typical of the Third Empire, contributed to the direction of events in British Columbia.
The advantages of a new political order in British North America had been under consideration in London and in the colonial capitals, including Victoria, for some time. A number of diverse events and considerations created pressure for change. Having been out of consideration when the Reciprocity Treaty was negotiated between the eastern colonies and the United States, The West Coast was left facing its largest market over a wall of tariffs. The mother country, for its part, was looking for reductions in the costs of Empire, without either offending the United States or giving in to it. In 1863, Britain declared the northern boundary of British Columbia to be the sixtieth parallel. In Congress there were calls for extension of the United States boundary beyond the fifty fourth parallel, well into British territory. In Victoria there was agitation for annexation to the United States, and, in 1866, a petition was sent from some residents of the city to the President, asking him to seize the colony. In these circumstances, Amor de Cosmos and other `Canadians', mostly on the mainland, suggested responsible government within British North American Confederation. The future of the region was less than certain until the British Government, itself, moved for Confederation. The Company Compact and all colonial officials then sided with the `Canadians'.
The principle considerations leading to Confederation were political exigencies in the evolution of the British Empire; but political exigencies are not without economic dimensions.
Maritime Union was a preliminary to Confederation on the West Coast, and Maritime Union was the product of perceived economic advantage. The Assembly in Victoria wanted consolidation of debts to increase overall borrowing power. It wanted an end to ongoing destructive commercial rivalry between the colonies. With the Gold Rush over, the Island came into line with Mainland policy by accepting the idea that a protective tariff would encourage agricultural settlement. Previously, the Island had rejected tariffs in order to preserve Victoria's commercial advantage over mainland ports.
In the late 1860s, the economic advantages of Maritime Union were perceived to extend to transcontinental union. With the promise of railway and telegraph connections, and with a tariff that was, at least, incidentally protective already enacted in Canada, there was a brief moment when it seemed that even from an economic point of view there was a certain commonality in all of the British North American colonies.By 1866, the tapping of tremendous resources of the forests, mines, and rivers had commenced, and projects had been started which necessitated large-scale investment of capital as well as a labour supply. Neither the government nor the banks gave financial assistance to the promoters of these enterprises. After 1866, the burden of the government's indebtedness increased with each passing year. Both the Bank of British North America and the Bank of British Columbia followed extremely conservative policies, and were reluctant to make credit available either to the government or to individuals. Lack of cheap land also hindered economic development. Until 1867 the Hudson's Bay Company retained sovereignty over crown lands on Vancouver Island, and in many cases, sites which would have been favourable for centres of trade or new industries formed part of the Company's holdings or were set aside as government reserves. In addition, the large areas in good farming districts which had been acquired by former Hudson's Bay men, were not subdivided. Many Canadians felt that the shift from an economy based on the staples of fur and gold to one based on coal-mining, lumber-milling, salmon-canning, and four-milling, would result from political union with Canada. Only in this way, they thought, could capital and labour be imported, and a railway built (Ormsby, `Canada and the New British Columbia', p.~100-101.).
At that passing moment the economy of British Columbia seemed to be growing into the policy environment that emerged in Canada with the Galt tariff of 1858. Still the situation was not without its confusions. Helmcken, spokesman for the conservative faction, opposed Confederation on the grounds that it would mean loss of control over commerce, and would drain revenues into Canada. His position on Confederation was not unlike that of Howe in Nova Scotia. Robson, of New Westminster, replied that the building of the railway and other public works would offset those losses, and that the Canadian tariff would protect agriculture in British Columbia.
During the `Confederation Debate' considerable discussion took place concerning the general virtues of protection and free trade as economic theories. At a crucial meeting a resolution was passed thatIn the opinion of this Council it is highly desirable that the agriculture, horticulture and dairy industries of British Columbia be protected (Pethick, p.~190.).De Cosmos then put forward a similar resolutionthat it is highly desirable that manufactured articles should be protected (Pethick, P.~190.).That this second resolution did not carry was surprising, because the protective tariff was one thing that Robson and Helmcken could agree on. The negative judgement emerged from doubts that Ottawa could be relied upon to establish a tariff that would meet the particular needs of the West Coast.
This ephemeral apparent congruity between West Coast needs and central British North American economic policy was not the motivation for confederation. It simply forestalled objections on grounds of economic incompatibility. The Confederationists were struggling for responsible government, more than they were struggling for economic benefits. Helmcken, in opposition to Confederation, was concerned only with the economic dimension of the proposal.
Terms of were agreed to in 1871. Canada, that is the Federal Government, would assume the West Coast colony's debt. It would provide postal, telegraph and other services, and it would build a railway to British Columbia, and a graving dock at Victoria. The Canadian tariff would apply to the whole of the federation.
Apart from the minor San Juan and Alaska Pan Handle boundary disputes, Confederation closed the era of uncertain political frontiers on the west coast of North America.
Whatever the political benefits, the absence of economic benefits from Confederation soon caused even those who had favoured it to change their minds. The national tariff was never really accepted on the West Coast. It made no sense in an regional economy that exported primary products to world markets, and imported manufactured goods. In 1873, when the surveys for the railway had yet to be completed, Alexander Mackenzie, then Prime Minister of the federation, attempted to reopen negotiations on the railway clause, with a view to rescinding it. At the same time, feuding broke out between Victoria and the Mainland over the location of the transcontinental railway's terminal. With depressed economic conditions forcing serious cutbacks in provincial spending, and the Liberals in power in Ottawa continuing to renege on the railway, Amor de Cosmos, now a member of the House of Commons, moved the peaceful separation of British Columbia from Canada.
Having agreed with the rest of Canada at the moment of Confederation, British Columbia continued to agree with it in the years that followed; at least in the following way. The set of factors bringing about Confederation included very long run factors of disintegration. Confederation entailed the separation of Ontario from Quebec: the disintegration of Canada as it had been prior to 1867. The forces of disintegration evident in the separation out of these two provinces continued their relentless disintegration of the whole of the new federation, including British Columbia, thereafter.
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