19-05-2025
Remember, remember, the economic lessons from Canada's uneasy past
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
Monday, Victoria Day, is the past's shout-out to the present. The current moment makes that shout-out all the more poignant: A reminder from Victorian era Canadians that they forged a working federation while laying rails to hang an economy on. They were nation builders.
Queen Victoria, whom the day honours, was a strong proponent of Confederation in 1867. She told a Canadian delegation she took the 'deepest interest in it' because she believed it would make her North American provinces 'great and prosperous.'
And such was the dream. By 1876 the Intercolonial Railway was in place, connecting the economies of the Maritimes, Ontario and Quebec. Treaties were being signed with Plains First Nations and Dominion Land Surveys were developed in Western Canada to divide land into parcels of one square mile for farming and inexpensive homesteads.
Canada was a new frontier for investment. Capital flowed from Britain, new banks and insurance firms were founded. Immigrants were arriving. In November of 1885 the greatest infrastructure achievement of Victorian Canada was completed, the Canadian Pacific Railway (CPR). Using iron spikes, workers fastened a transcontinental economy to the land from the Atlantic to the Pacific.
The work was hard, the idea of Canada caught people's imagination, but the gap between its promise and the economic reality gave reason for many to think Canada was a failed project. Despite completing the CPR, the economy wobbled, banks failed, and Ottawa's coffers ran low. Hundreds of thousands of Canadians moved south to the United States in the 1880s and early 1890s.
While Canada's current Liberal Prime Minister, Mark Carney, rightly said 'never' to the idea of Canada becoming the 51st state in his recent visit to the White House, some Liberals in the late 1880s said 'maybe' to the idea back then.
The union that Queen Victoria presided over, after all, was an alliance of strangers. There was little truck or trade between the three-and-a-half million people spread across a giant continent. Most provinces were more familiar with their U.S. neighbours than each other.
The appeal of late 19th-century America to Canadians of the time rings familiar today. Carnegie, Rockefeller, J.P. Morgan, Henry Ford – the billionaires of their day were the faces of a modern industrial economy that produced skyscrapers, the modern corporation, modern steel production, modern finance, the petroleum industry and the beginnings of the auto industry.
In contrast, Canada seemed a motley crew of regions that trains happened to roll through from time to time. The promise of a national economy was not a reality.
What changed?
Investments that farmers in Ontario and Quebec were making in new equipment and farming methods to improve productivity in the late 1880s and 1890s began paying off as the 20th century approached. The result was bumper crops and bumper profits from sales to export markets that also spread to the Prairies. This reinforced the demand for new farm equipment, driving added manufacturing capacity and innovation in the process.
The knock-on effect could be seen in the growth of banking and the demand for engineers, lawyers and a professional managerial class. With more deposits coming from farmers in Ontario and Quebec, there was more capital to support larger, complex projects that continued to give momentum to productivity improvements, including two new national railways built between 1900 and 1912.
Mining for gold, silver and other minerals took off in Ontario and B.C. Developing efficient sources of energy, such as hydroelectric power in Ontario and Quebec helped electrify cities while making it easier to produce steel as well as pulp and paper.
Today, Canada is in the kind of economic ebb that tested the country in the late 1880s. If Canadians who built the economic foundations of Canada in the three decades after Confederation could speak, they would tell us that national infrastructure isn't enough. Building productive businesses is equally important if you want the prosperity Queen Victoria believed Canada was capable of.
