Mercantilism, Settlement, Newfoundland


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There is much to be learned from the history of economic activity in Newfoundland. It illustrates aspects of the early commercial development of North America under European mercantilism. It prompts consideration of Canada as a political union of distinct regional economies. It provides an illustrative case of development based on a single export. The Staple Theory seems to explain what happened in Newfoundland, especially when the Staple Theory is interpreted as the Theory of the Staple Trap; because in Newfoundland forward and backward linkages to the staple export did not progress to W.W.~Rostow's point of take-off into independent growth. The history of economic activity in Newfoundland also provides an illustrative case with respect to the stages theory of economic development. Having no base in agriculture, Newfoundland could not progress though the stages proposed by Adam Smith. From the point of view of the stages paradigm, therefore, it was the absence of agriculture, not the repressive character of mercantilism, that determined the growth path of the Newfoundland economy. The Theory of the Staple Trap, with its emphasis on the repressive nature of international capitalism, only seems to explain what happened in Newfoundland. New England's economy was strong enough to break out of grasp of mercantilist imperialism. Newfoundland's economy was not. It is not only the repressive nature of mercantilism, but the nature of the colonial economy that determines the path of economic development.

From the point of view of the stages paradigm, the Newfoundland economy was not an embodiment of a mercantilist commercial stage. It was a combination of two stages, each in a different economy: the commercial stage in Europe, and the gathering stage in America. The trade in cod was a capitalist trade rooted in a resource in which no property rights, of any kind, could be enforced.

Very long run economic factors in the integration of Canada come to the fore in a consideration of the historical sequence of its staple exports, particularly exports of fur and wheat, but also, to some extent, of timber. Examination of the nature of the cod staple export of Newfoundland draws attention to staple exports as a factor in the disintegration of Canada. The fish trade looked to the markets of Europe, New England, and the West Indies, not to continental North America. Structured by capitalistic trade institutions and rooted in a common property resource, it had nothing like the feudal and attenuated feudal institutions that influenced the growth paths of francophone and English-speaking central Canada. The Newfoundland economy was quite different from and oriented away from the economies of continental Canada until Newfoundland entered Confederation in 1949.

Disintegration in the Canadian economy also has roots in the different characteristics of its staple exports, characteristics of the same general nature as the distinguishing characteristics of its original systems of land alienation and tenure; that is, characteristics in the form of property rights institutions. The cod on the Grand Banks are a common property resource. During its first two centuries of development, Newfoundland had almost no institutions of land alienation and tenure, and those that it had could not be characterized as either feudalistic or capitalistic. The wheat staple export of early twentieth century Canada was institutionalized in capitalistic property rights supporting small, independent farms. Unlike fish, wheat was not simply gathered. It was cultivated. The fur trade of the seventeenth and eighteenth centuries in New France and Quebec, like the fish trade of Newfoundland, was institutionalized into a common property resource. In this regard the fur trade was more like the fish trade than it was like the grain trade. It is instructive to remember that, in the end, the fur trade was not capable of supporting a transcontinental organization. Canada's staple export trades have been disintegrating as well as integrating forces.

One of the American Colonies

The Newfoundland economy was a product of the same forces that impinged on all North America in the Age of Sail. It was a place of settlement at the time of settlement everywhere north of Spanish territory. It flourished in the late eighteenth and early nineteenth centuries, when the rest of the east coast of North America flourished. It accompanied other maritime economies into relative decline in the Railway Epoch. The development of Newfoundland was part of the commercial development of the North Atlantic littoral. An account of Newfoundland in the Age of Sail has to begin with an account of the general advance of Europe in America.

Early commercial development in North America was shaped by the nature and evolution of European imperialism. In the mercantilist ideal of that time, commerce was an intra-imperial activity. If, in fact, commerce was not intra-imperial, mercantilist policy attempted to make it so. Accordingly, control of territory important to particular trades was a matter of great importance.

Territorial expansion of the European mercantilist empires was frequently driven by the demands of their staple trades. In its mercantilist meaning a staple was a centralized market subject to political control. In the case of tobacco, for instance, England established a staple, a single place at which the commodity could legally be exchanged, to facilitate enforcement of excise taxes. Eventually the term `staple' was applied to any trade legally confined to intra-imperial exchanges. Usually these trades were the specialized activities of particular colonies, the economic development of which was largely dependent on exports of primary products. In such colonies, the term `staple' came to be synonymous with the commodity upon which the colony depended.

The great North American staple trades of the British Empire in the Age of Sail were the trades in fish (cod), fur, and timber in the northeast; in tobacco and cotton in the southeast; in sugar in the West Indies; and in sea otter furs on the pacific coast. Other, less important trades that could be characterized as staple trades in some sense of the term were the trades in indigo and cattle in the southeast, the trade in timber on the Pacific coast, and the trades in wheat, flour, and potash in English-speaking Canada. Newfoundland was important in the fish staple trade.

Digression on Territorial Expansion

The importance of region specific staple trades notwithstanding, the political allegiance of regions on the coast of North America, east and west, was not definitive until the formation of the Canadian federation in 1867. Because control of coastal territories was important for control of the interior, the chronology of colonial imperialism with respect to the coastal bases of the great commercial staple trades is not separable from the chronology of the political division of the interior of the continent.

Economic exigencies were so confused with political developments that meaningful general divisions in the chronology of European mercantilist imperialism are not easy to find. On the east coast, the implantation of colonies began in the seventeenth century. Boundaries solidified in the first two decades of the nineteenth century. On the south coast, and along the Rio Grande and the Gila rivers, from the Gulf of Mexico to the Gulf of California, possession was asserted in the sixteenth century. Definitive boundaries were established in the early nineteenth century. On the west coast, possession was asserted in the south in the sixteenth century, and in the north in the eighteenth century. Definitive boundaries were set in the middle of the nineteenth century. The northern coast, except the coast of Hudson Bay and the mouth of the Mackenzie River, remained closed to Europeans until the twentieth century. Expansion in the north, that is in what is now Canada, occurred along the rivers flowing east to west or west to east through the Western Cordillera and across the Central Plain. This northern traverse, north of the height of land between the Mississippi and Hudson Bay drainage basins, was a gradual penetration that took two centuries, from 1600 to 1800.

There were four major readjustments in territorial control. In 1713, (the Treaty of Utrecht) Britain acquired Florida, Acadia, Newfoundland and the Hudson Bay drainage basin from France. In 1763, (the Treaty of Paris) Britain acquired New France, and Spain acquired Louisiana (New Orleans and the western half of the Mississippi drainage basin). In 1783, following the Revolutionary War, the United States acquired the eastern half of the Mississippi drainage basin south of the Great Lakes and north of the Spanish territories on the Gulf of Mexico. Between 1803 and 1848, the United States annexed, had ceded to it, or purchased all the Spanish and Mexican territories along its southern and western borders. These four readjustments occurred in the Age of Sail. Immediately thereafter, in 1867, the United States purchased Alaska from Russia, and, in 1872, the Canadian federation absorbed the territory between the State of Washington and the Territory of Alaska.

The central part of the east coast of North America was the last part of that coast to be discovered, but it was settled at the same time as earlier discovered regions. Europeans first contacted North America by way of Iceland. Some settlement was attempted at the end of the thirteenth century. This contact was lost. Columbus discovered the West Indies in 1492. John Cabot explored Newfoundland and Cape Breton in 1497. Between 1534 and 1536 Jacques Cartier explored the Gulf of St. Lawrence and wintered at Quebec. Permanent settlement in Newfoundland probably dates from 1611. French settlement in what is now Canada began at St. Croix in the Annapolis Valley in 1605, and at Quebec in 1608. Settlement in what is now the United States first occurred in Virginia in 1605. The Dutch settled in New Amsterdam (subsequently New York) in 1614, but lost the colony to British conquest in 1664. New England was first settled by the Plymouth Brethren in 1620 and by the Puritan, Massachusetts Bay Company in 1629. With additional immigrants from Britain, New England settlements expanded north to take Acadia by force in 1713, and New France, again by force, in 1763. These military acquisitions, as much the result of peace settlements in Europe as of actions taken in North America, were lost to New England in the settlement following the Revolution of 1776. The Virginians, also with additional immigrants from Britain, expanded south into the Carolinas by 1663, and into Georgia by 1733. Having obtained Florida from the French in 1763, Britain lost it to Spain during the American Revolution. Florida remained Spanish, although settled by United States citizens, until it was purchased by the United States, in 1819.

Discovery and settlement along the Gulf of Mexico, the Rio Grande, and the coast of California was a consequence of the expansion of the Spanish empire. Spain had discovered the west coast of California and had crossed the Pacific to the Philippines by 1572. Over the next half century, expanding north from Mexico, it penetrated the interior of North America. In 1763 it acquired the French territories associated with New Orleans and the Mississippi, and, by 1782, it had reasserted its position in Florida.

In the first half of the nineteenth century, Spain lost its hold on continental North America to a revolution in Mexico, in 1822, and to United States expansion. France, under Napoleon, regained Louisiana in 1800, but sold it to the United States in 1803. Spain sold its territories on the Gulf of Mexico east of the Mississippi to the United States, in 1819. The United States annexed Texas in 1845. Mexico ceded the Pacific coast and the interior to the 42nd parallel to the United States ,in 1848, and the United States purchased a narrow strip south of the Gila from Yuma to El Paso, in 1853.

Britain and the United States arrived late on the Pacific coast. A Russian explorer, Vitus Bering, crossed over to America, in 1728, and subsequently extended fur trading activities down the coast. By 1783, competing with Russia in the sea otter trade with China, Spain had advanced its activities to the mouth of the Fraser River. In 1788, Britain's James Cook explored Nootka Sound, while the United States' Robert Gray explored the coast of Oregon. After 1800, British and United States activities expanded. Spanish activity declined with the general decline of the Spanish empire, and Russia withdrew to Alaska and the northern portion of the coast. Having gained the Spanish territory in a revolution, Mexico withdrew to its present northern boundary, by 1848. Russia sold Alaska to the United States, in 1867.

Expansion of Europe across the interior of the North American took two centuries. It began in Virginia and New France in 1605. The French reached the Straight of Michilimackinac north of Lake Michigan by 1650. By 1700 there were Hudson's Bay posts on Hudson Bay and James Bay. By 1750 the French had a post on Lake Nipigon, north of Lake Superior, they had explored the Mississippi to its mouth on the Gulf of Mexico, and they had penetrated the Central Plain to the foothills of the Rocky Mountains. In 1756, westward advance of the British colonies entered French territory along the Mississippi causing the Seven Years War as a result of which the French were virtually excluded from North America. Twenty years later, the American Revolution confined Britain north of the Great Lakes and the Mississippi drainage basin, and extended the United States to the Mississippi River. When Alexander MacKenzie reached the mouth of the MacKenzie River in 1810, Lewis and Clark had already completed their journey overland from St. Louis to the mouth of the Columbia, and Simon Fraser had crossed the mountains to the Pacific. When David Thompson arrived at the mouth of the Columbia River, in 1811, he found a post of John Jacob Astor's United States fur trading company. Thereafter, expansion of United States and British territory took place at the expense of Spanish and Russian territory.

The advance of Europe in North America, excluding Latin America, can be recounted in stylized, turn-of-the-century positions. France, Holland and England began settlement on the east coast in 1600. France and England reached a line down the middle of the continent from Hudson's Bay, through Lake Superior, and down the Mississippi by 1700. Britain and the United States reached the Pacific coast by 1800. By 1900, Britain and the United States were in possession of the west coast from California to the Aleutians, and had divided all of non Latin North America between them.

In relation to these events, building up to the emergence of two transcontinental economies in North America during the Railway Epoch, developments in Newfoundland in the Age of Sail take on the appearance of a false start. Newfoundland was more a part of Europe, or, at most, an Island in the North Atlantic, integral to neither Europe nor North America, but related to both. The history of its economic development is little more than a partial account of the northwest Atlantic fisheries. Given its distinct character, the integration of Newfoundland into the Canadian federation, in 1949, reinforced long run factors in the disintegration of Canada.

The Cod Fisheries

The cod fishery was an uncomplicated commercial harvest of a common property natural resource. Basic property rights, courts and government, that is, the institutions necessary for more complex economic activities, were absent from the fishery, and from Newfoundland, until 1824. Until the last decade of the eighteenth century, the fishery was essentially migratory, operating out of southwest England, western France, Portugal, and Spain.
In the sixteenth century the fishing industry of the New World involved a marked extension of the economic frontiers of the nations of Europe. The widely scattered ports of France sent vessels north to Newfoundland and the Strait of Belle Isle and south to Cape Breton and Nova Scotia. By 1550 this fishery was prosecuted on the Banks, and by the end of the century at Gaspe in the Gulf of St. Lawrence. The story of the Portuguese fishery paralleled that of the French fishery in point of time; but the Portuguese fishery had been largely limited to southeastern Newfoundland. The Spanish fishery grew rapidly after the middle of the century, and Portugal was absorbed by Spain in 1581. Excluded from Iceland, the English fishery expanded in Newfoundland and became established with the defeat of Spain, the opening of Spanish markets, and access to supplies of specie and to cheap supplies of salt. ... France and England were quick to take advantage of the decline of Spanish control and the rise in prices which accompanied the inflow of American treasures; and, in place of the Spanish, who made their fish "all wet and do drie it when they come home", the English and French dried it in the New World and carried it to Spain. The English fishery extended itself along the Avalon Peninsula and later into New England waters. The fishery of France expanded to the Gasp\'e coast and to areas suited to the production of dry fish.
The extension of fishing to the New England coast and the development of the winter fishery facilitated the growth of settlements, shipping, and trade, and the emergence of a second vigorous commercial organization. ... The increase in the fishing industry and trade brought about conflict with France. The French fishery was confined to the summer season but expanded as a result of the Civil War in England. Placentia was established and, under Colbert, France became aggressive in New France and the French West Indies. But recovery in Newfoundland and expansion in New England restricted the French not only in production but also in markets. Carried on over wide areas and from scattered seaports, and concerned largely with the green fishery and domestic markets, the French fishery had no focus in settlements, shipping, or trade. ... With the elimination of the French [Treaty of Utrecht, 1713] ... friction between the commercialism of New England and that of England itself became more serious and led to the American Revolution (Innis, 1940, pp.~486--487.).

Newfoundland's total involvement in the fishery, and its complete external orientation from an economic point of view were consequences of the absence of agriculture from the island. Agricultural development under proprietorial grants was attempted. It failed. Without denying the rapacious brutality with which the migratory fishing interests opposed permanent settlement, the cause of failure is to be found in lack of arable land. In Newfoundland, commercial development did not lead to the development of the country, as Innis suggested it had for all of North America; nor was there even a parallel development of agriculture. Adam Smith's natural sequence of development was geographically impossible. There was, of course, some arable land, and some agriculture. In the mid seventeenth century, Carbonear on Conception Bay on the north of the Avalon Peninsula was reported to have had 79 head of cattle, 22 sheep, and 48 hogs. This was exceptional.

The history of the northwest Atlantic fishery and of Newfoundland can be divided into six stages: the development of the migratory fishery to 1600, the struggle for permanent settlement to 1700, the dominance of New England and the rise of the resident fishery to 1776, the approach of Newfoundland to relative independence in the first half of the nineteenth century, the relative decline in the Railway Epoch, and the development of the Canadian province of Newfoundland, after 1949. The first four of these stages occurred in the Age of Sail.

The Migratory Fishery

The importance of the fishery in the general development of North America is measured by its importance to the trade of Britain. In the 1770s, at the height if its importance, the Newfoundland fishery, including salmon and seal, had an annual worth of 1/3 to 2/5 of all of the exports of New England to Britain (North, p.~60. Innis, { passim). While this in itself is impressive, the importance of the fishery was heightened by the co-existence of a French fishery, and remnants of Spanish and Portuguese fisheries, the presence of which stimulated imperial rivalries.

Newfoundland's recorded history begins in the last decade of the fifteenth century. John Cabot explored the Gulf of St. Lawrence and reported to the British government in 1497. Probably, West Country English fishermen had been on the banks off the coast of America before that. Between 1500 and 1585 English exploitation of the fishery increased, but Portuguese and Spanish fleets were dominant. There was no interest on anyone's part in year round shore establishments. The migratory fishery was lightly capitalized and had a short time horizon. Each year arrangements would be made to provision a summer trip to the fishery. The fish would be `wet cured' with salt on board ship, or `dry cured' with much less salt on racks set up on the shore. At the end of the season the product would be sold in England, frequently for re-export to southern Europe. In the following year entirely new arrangements would be made, even if the associates of the previous year stayed in the fishery. Normally, an arrangement involved, \quote{a ship of 100 tons, with a crew of forty. Fishing from eight small boats manned by three men, this crew could make 2,000 quintals [200,000 lbs.] of medium size dry fish and perhaps some 100 quintals [10,000 lbs.] of wet fish.} The fish were caught with hook and line, using shoalling herring, mussels or spawning capelin for bait. Contact with the shore was necessary for drying, to acquire water, wood for fuel, and bait, and, in the beginning, to trade with the natives for furs. All ships returned to England at the end of each season.

The Struggle for Settlement

England moved to establish possession of Newfoundland late in the sixteenth century, perhaps in response to French interest in shore establishment, and perhaps in response to those general circumstances that led to the establishment of colonies elsewhere on the east coast of North America in the first decade of the seventeenth century.

Accounts of Sir Humphrey Gilbert's taking possession of St. John's harbour, in 1583, differ. According to one account, he sailed into the harbour to find a number of Spanish and Portuguese fishing vessels at anchor. His instructions were that he should claim for England all lands not claimed by another Christian prince, disregarding any general assertions by the Papacy. No one from the fishing vessels was living on shore, so Gilbert assumed that none had taken possession. After capturing and plundering what foreign vessels he could, he left for home, intending to return to take possession the following year. He failed to reach England, and no colony was planted.

In the year of Sir Humphrey's action in St. John's Harbour, the London and Bristol Company, a joint stock company, advised the Crown that it was prepared to sponsor permanent settlement in Newfoundland. Whatever its `real' motivation, the company proposed an agricultural colony, and intended to explore for iron ore. Migratory fishing interests, assuming that the Company wanted to monopolize the fishery, opposed settlement with every legal and physical harassment possible.

West Country opposition was only one cause of the eventual failure of settlement. Want of arable land was also a factor. The settlement at Cupids in 1610, about 100 souls including some women, survived, but prospects were poor.

Agriculture gave a most uncertain yield. One winter seventy of the goats, as well as pigs and cattle, died for lack of fodder and the wheat and rye would not ripen. Only the cabbages and turnips yielded satisfactorily. In the estimation of a farm manager sent out to assess the situation, the high land was rocky and barren, the low land permanently flooded, and the grass was refused as fodder by the stock (Head, p.~33).
The settlers turned to fishing, as the migratory fishermen suspected they would.

There were other difficulties. The seventeenth century was the century of the Puritans and the Glorious Revolution in England. At one point the King was beheaded, and the monarchy became the captive of bourgeois large land owners. Reformation in the Church became entangled with reformation in the state, whether one was Catholic or Protestant became a matter of great political importance. So it was that George Calvert, Lord Baltimore under a Catholic Crown, became suspect for his Papist activities at Ferryland on the eastern Avalon Peninsula. His colony had been initiated with about 100 souls in 1621. After a violent encounter with the French, and a winter of serious sickness, Baltimore returned to England to obtain a grant on the mainland. His second colony, Maryland, was a success. Calvert was succeeded at Ferryland by one David Kirke whose religion was not suspect, though his economic motivation, like that of the London and Bristol Company, was. In 1634 West Country fishing interests in Parliament succeeded in having settlement legally suppressed. Probably some settlers remained on the Island, but there is no formal account of the Ferryland colony after 1640.

Throughout the latter half of the seventeenth century, settlers and summer fishermen were at war. Caught up in the brutality with which the Europeans treated one another, the natives of Newfoundland, the Boethuks, did not survive.

There was no law on the Island except that enforced with respect to shore rights by the `Admirals'. An `Admiral', the first captain into a harbour at the beginning of the season, would allot spaces for drying racks. This was the extent of law. Eventually, over the next century and a half, the system came under the control of a formally commissioned Commodore of the English Fleet, whose position evolved into a year round governorship. In the meantime, however, having the upper hand, the migratory fishermen mercilessly harassed the few remaining settlers. Still, the settlers survived, making a living by selling supplies, furs, and even fish, to the seasonal venturers. By the late eighteenth century, despite the absence of enforced property rights, a resident inshore fishery had taken on significant importance in the trade.

Two other factors were at work in the rise of the resident fishery: the success of settlement in New England, and the continuing evolution of the sailing ship. By the end of the seventeenth century a significant triangle trade had developed between England, New England and southern Europe. New England had a year round fishery and an agricultural surplus. Manufactured goods came out from England to America. Grain, meat, lumber and fish returned to southern Europe from New England. Wine and fruit moved to England from southern Europe. There were other commodities, and money was involved. This triangle overlapped an increasingly important Newfoundland triangle: supplies and ballast from England to Newfoundland; fish from Newfoundland to southern Europe; specie, wine, French linen, and silk from the Levant to England. Given the length of the trip in the Newfoundland triangle, larger ships were used, sack ships, named after the wine they brought back to England. Sack ships were not fishing vessels. They brought out supplies for both seasonal fishermen and permanent settlers, purchased fish, and sailed for Europe. The appearance of these ships separated fishing from the trade in fish, and favoured the resident fishery which, in turn, created a market for New England supplies.

Over this period, mercantilist self-sufficiency dictated as little trade as possible between colonial empires, though there were profits to be made in inter-empire trade. Because it was not formally a British colony, Newfoundland was not excluded from trade with non-British agents. In fact, in the last thirty years of the seventeenth century, it was virtually a free trade zone for all Europe and America.

European commodities carried by the masters of English ships are these; from France, brandy, wine, salt, linen, canvas, paper, hats and silks; from Spain, wine, brandy and iron in great quantities; from Portugal, wine, brandy, salt, and French linen and quantities of silk from the Levant, all which goods are sold or trucked with the traders from New England for tobacco, sugar and other enumerated commodities, which they carry to foreign parts so that in the latter end of the year, ye masters are wholly taken up in the management of that trade (Head, p.~112).

New England and the Resident Newfoundland Fishery

When, in 1699, the Newfoundland Act permitted settlers and `byeboat keepers' to legally participate in the fishery, the shape of eighteenth century Newfoundland was revealed.

The eighteenth century opened with the War of the Spanish Succession. In 1696, and again in 1705, French forces overran the English settlements on Newfoundland. Thereafter, Newfoundland rose with the rising British Empire. By the Treaty of Utrecht, 1713, England acquired Newfoundland, the shore of Hudson Bay, and most of Acadia. The Treaty of Paris, following the Seven Years War in 1763, awarded New France to Britain. It was the time of ascendancy for the British Empire. It was the time of Newfoundland.

New England prospered, expanded, and absorbed the trade of Newfoundland as the migratory fishery declined in importance. In the years immediately before the Revolutionary War, New England supplied Newfoundland with 80% to 90% of its supplies for making bread (Head, p.~211). In 1716 one third of Newfoundland's fish catch was residential. In 1764 two thirds of the catch was residential. By the end of the century, 90% of the fishermen were year-round Newfoundlanders, and the catch was marketed largely by New Englanders.

There were several trade triangles involved, none exclusive of the others. The old Newfoundland triangle, with England and southern Europe, came to be dominated by traders rather than fishermen. It merged with the unregulated general trade of Newfoundland. New England traded lumber, grain, rum and meat for fish and contraband in Newfoundland. It traded grain, meat, lumber and fish for sugar, molasses and fruit in the West Indies. It carried sugar, molasses and fruit to Britain and manufactured goods from Britain back to New England. It carried rum and other products to Africa, and returned with slaves for the West Indies and the southern plantations. The southern plantations, in part through New England, sent tobacco, rice and indigo to Britain in return for manufactured goods. New England traded fish and other products to southern Europe for wine, silk, and other Mediterranean products such as olives and dates. The success of agricultural settlement in New England and the Newfoundland fish trade were the substance of Britain's North Atlantic economy.

The Relative Rise of Newfoundland

The American Revolution seems to have done for Newfoundland what it did for Nova Scotia. Cut off from Boston, the loyal Atlantic coastal colonies of Britain acquired their own merchants, developed their own trade, and built their own ships. Apart from a period of depression, from 1815 until 1830, when the market for fish slumped, Newfoundland expanded with the rest of the northeast coast of North America. In the nineteenth century, the faster, sleeker schooner, developed during the Napoleonic Wars to run the British blockade, became the basis of a flourishing shipbuilding industry, supplying carriage for trade up and down the coast, around South America to the west coast, and across the Pacific to China.

Economic development in Nova Scotia and Newfoundland would have been vigorous, if not so vigorous, without the American Revolution. Causation ran both ways between economic and political events. The Maritimes' entry into Confederation in 1867-73 is often cited as a contributing cause of the relative decline of the region thereafter; however, neither Newfoundland nor New England entered Confederation, and they suffered the same relative decline. Similarly, commercial flowering of northeast North America between 1700 and 1850 was as much a cause as a consequence of the Declaration of Independence. Subsequent decline in the area, coinciding with building of railways across the interior of the continent, was a contributing cause of political arrangements leading up to constitutional centralization in the United States and Canadian Confederation in the latter half of the nineteenth century.

Still, the immediate effect of the American Revolution on Newfoundland was cessation of all trade, panic, commercial disaster, and, before the first winter was out, starvation. In time, new sources of supply were found in Canada and Britain. Direct contact was made with West Indies markets. Spurred by the opening of a winter, off-shore seal hunt, after 1794, Newfoundland built its own schooners to replace ships formerly supplied by New England. Organization of the trade of Newfoundland moved increasingly to St. John's. When shipping and the off-shore fishery fell victim to the hostilities of the Napoleonic Wars, West Country merchants moved to St. John's, and the inshore fishery expanded. The last of the West Country fishing ships left St. John's in 1884, but the migratory fishery was virtually terminated by the War of 1812. Thereafter, in place of complaining about the rapacious and exploitative behavior of the West Country interests, Newfoundlanders complained about the rapacious and exploitative behavior of St. John's' merchant money lenders.

The American Revolution and the Napoleonic Wars, directly or indirectly, hastened economic and political development in Newfoundland. In 1785 the Island's population was 10,000; by 1815 it was about 40,000. Despite the difficulties of the fishery between 1815 and 1830, political advance continued. In 1824 Newfoundland was formally established as a colony with a year-round Governor and circuit courts. In 1832 it achieved representative, though not responsible government.

Newfoundland advanced economically with the east coast of North America until the end of the Age of Sail. It remained relatively underdeveloped and poor, nonetheless. With the advance of continental development in the Railway Epoch, Newfoundland entered a period of relative decline, losing even its political independence in the early years of the twentieth century.

Mercantilism and Settlement

It is part of the lore of Newfoundland that its relative economic dependence has been a consequence of its history of repressive, mercantilist exploitation. Legal prohibition of settlement, at the behest of migratory fishing interests, seems to be clear evidence that this is the case. There is evidence to the contrary, however; evidence that has lessons with respect to the Staple Theory and the Distinctive Economies Hypothesis of Canadian economic development. Settlement did not succeed in Newfoundland because geography and climate were against it. Repressive mercantilism also worked against economic and political independence in Newfoundland, and it succeeded; but it succeeded, in large part, because geography and climate favoured its success.

According to the Staple Theory, forward and backward linkages, associated with primary product exports, multiply and evolve until self-sustaining, independent growth is achieved; or, until standards of living are roughly equal to standards in the economies to which the staple is exported. Neither of these occurred in Newfoundland. In the case of Newfoundland, the absence of domestic agriculture was associated with continued economic dependence and relative poverty. In the cases of Lower and Upper Canada, the presence of a substantially independent, agriculturally based economy was associated with relative economic independence and higher standards of living. Whatever may be elaborated in theory, Newfoundland's experience points to the possibility that the success of the Canadian economy cannot be accounted for by staple exports alone, and, perhaps, not by staple exports primarily.

The Newfoundland economy is unlike the economies of the Maritimes, British Columbia, or the Prairie Provinces. The Maritime Provinces have significant agricultural sectors, as does British Columbia, and the initial economy of the Prairie Provinces depended on exports of produce cultivated on privately owned farms, not on a common property resource. The difference between the Newfoundland economy and the economies of Ontario and Quebec is greater still. However politically correct it was to extend Confederation to included Newfoundland in 1949, there was no economic justification from the point of view of the Canadian economy as a whole. Newfoundland has been a have-not province and a net drain on the federal treasury from the beginning. Further, its unique problems have called for policies different from policies appropriate for other parts of the Canadian federation. If Newfoundland is taken as a typical case, the Canadian economy is a product of political, rather than economic forces. Economic forces, pitting region against region in the shaping of national policy, and in the distribution of national wealth, favour the long run disintegration of Canada.

REFERENCES

Cell, G.T. 1969, English Enterprise in Newfoundland:
1577--1660
, University of Toronto Press, Toronto.

Head, C.G., 1976, Eighteenth Century Newfoundland,
McClelland and Stewart, Toronto.

Innis, H.A., 1934, `An Introduction to the Economic History
of the Maritimes (including Newfoundland and New England)',
in R.F. Grant (ed.) The Canadian Atlantic Fishery,
Toronto.

1940, The Cod Fisheries, Ryerson Press, Toronto.

Mathews, K., 1978, `Historical Fence Building: a Critique
of the Historiography of Newfoundland', Newfoundland Quarterly, vol.~99, pp.~21--23.

1988, Lectures on the History of Newfoundland: 1500--1830,< br> Breakwater Books, St. John's.

Rostow, W.W., 1960, The Stages of Economic Growth,
Cambridge University Press, Cambridge (Mass.).

Rothney, G.O., 1964, Newfoundland: a History
Canadian Historical Association Booklets, No. 10, Ottawa.