How industrialized was the Canadian economy towards the end of the nineteenth century?
Most studies on the development of the Canadian economy suggest that the industrialization of Canada did not take place until the twentieth century. McInnis, on the contrary, argues that Canada was among the world’s most industrialized nations by 1890. His deductions are based on the analysis of various economics factors including net output per capita.
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Using this scale, McInnis holds that the only nations whose industrialization ranked higher than Canada were United Kingdom, United States, and Belgium. Other countries in Western Europe also ranked high, but Germany, France and Sweden had a lower output of manufacturers per capita compared to Canada.
As a result, researches suggesting that the industrialization of Canada was laggard are flawed and misleading. O’Brien and Keyder suggest that the primary industries in most countries began to experience rapid growth after 1890, though there are still some nations that had attained a significant level of manufacturing.
Recent studies on the industrialization of economies have devised new measures of analyzing economic development and industrial advance (Cemeron 4). Economic historians propose that other lines of manufacturing development can replace the impact of cotton and iron industries in the economy.
According to Temin (189), the US was not considered among the industrialized nations by 1890 because it was still heavily reliant on cheap water power and showed reluctance in adopting the stationary steam engines for its manufacturing industry. Based on the new interpretation of industrialization by economic historians, it is possible to highlight the various successes of Canada’s manufacturing industries.
While some of these industries comprise craft-tie industries like tailoring and dressmaking, blacksmithing, and furniture making, there were still modern industry trends that involved their manufacture of agricultural machinery, steam engines, locomotives, railway rolling stock, and iron rolling mills (Cameron 5).
Canada was also involved in manufacturing for export in various industries including pork packing, cheese making, and lumber milling. American historians suggest that pork processing and packing indicates large-scale continuous processing that is a typical feature of modern manufacturing (Chandler).
Cheese factories use simple technology and are mostly small-scale, though they exemplify a transformation from household agricultural processes to specialized, factory-based production. This process was identified by economic historians as typical of the industrial revolution.
The lumber mills in Canada constituted a significant amount of Canada’s production due to the high capitalization and technical complexity of the manufacturing process. Additionally, Canada was also on the process of developing its roller milling industry, though it was not exporting much flour by 1890 (Chandler).
Where did the industrialization of Canada stand relative to other economies in 1890?
Industrialization refers to the percentage of total production that is accounted for by the manufacturing industry. Based on this definition, nations with a large and productive agricultural sector are not regarded as industrialized, even though they may have a significant amount of global output, as was the case with the United States towards the end of the nineteenth century.
This contradiction in the definition of the term industrialization is due to the factors of economic performance that are taken into consideration. The revised view of the Canadian manufacturing development was introduced by Dales in an attempt to re-evaluate the notion held by other economic historians that the Canadian economy had stagnated in the period between 1870 and 1890 (Temin 197).
The new approach was aimed at verifying contradicting theories by authors like Firestone and Bertram, who proposed that the economic growth rate was actually positive during this period. As a result, these authors, including Dale, focused on the rate of industrial growth for the evaluation of Canada’s industrialization on a global scale, with little consideration of the industrialization that it has already attained.
In addition, the authors led in the analysis of secondary manufacturing, which was thought of as more advanced than primary manufacturing. As a result, the authors led an analysis of industrialization that was focused on evaluating what was the right manufacturing as opposed to what was less desirable in the industry (O’Brien and Keyder).
However, this perception was overtaken by other strategies focusing on the output per capita of the manufacturing industry. The industrialization of Canada prior to the twentieth century was due to its large agricultural output. Canada also had significant amounts of output from other primary sectors including fishing, forestry and mining.
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This implies that industrialization of Canada was still not quite advanced in the late nineteenth century; however, an evaluation of its manufacturing industry in terms of output per capita places it among the highly industrialized nations at that time (Cameron 20).
Another reason why previous studies propose that Canada lagged in industrialization is due to the evaluation of industrialization in terms of “factory cotton textile spindles, pig iron production, tons of coal produced, and horsepower of steam engines” (Cameron 21). This perception was drawn from Britain, which was the first nation to industrialize, both in Europe and around the world.
The economy of Britain thrived in various industries including factory textiles, coke-smelted iron, and the use of steam engines. Consequently, economists measured the economies of other countries with regard to how their industries compared to those of Britain.
Based on these standards, Canada did not compare to Britain, or most of the other nations in Europe such as France and Germany. The cotton textile industry in Canada was just beginning to develop while the heart of the country did not use coal for the production of energy. Additionally, favorable deposits of iron core had not been identified.
As a result, the construction of the vital railway network between Canada and the US was reliant on iron rail imports from Britain. Studies suggest that one of the vital reasons why the industrialization of Canada was delayed was due to the lack of a modern iron smelting industry.
This is because the manufacturing processes in Canada depended on hydro energy while other nations used coal for manufacturing purposes. Based on these standards, the studies suggesting that Canada did not industrialize until the twentieth century are justified (Cameron 23).
In terms of per capita output of manufactures, Canada ranked among the world leaders in terms of industrialization. The structures used by past authors places Canada far behind other European nations like France, Germany and Sweden; however, an analysis base on the output per capita places Canada ahead of them in industrialization. Studies show that the GDP of Canada from manufacturing stood at 26% in 1890, which placed it behind the European nations.
Using the same scale, the United States had a GDP of 30% while that of Britain, France and Germany was in the range of 35-40%. One of the problems with this interpretation is that the European countries used a broad scale to evaluate the industrial sector. For instance, Mitchell proposed that the GDP of UK in 1890 was at 41%, France at 37%, Germany at 35.55, Belgium at 30% and Sweden at 23% (Mitchell).
However, the scale used by Mitchell included, manufacturing, mining and construction industries. Applying the same scale on Canada puts Canada at 32.5%, which is in the range of other European leaders, and not as far behind as suggested by most authors. Removing mining and construction sector from the scale lowers the GDP of Canada to 25.8%, which is below Belgium and United States at 30%.
Hence, Canada can be said to have lagged behind European industrial leaders, but not by a wide margin as implied in various economic literatures. In addition, the scale does not provide an accurate indication of GDP since the scale showed a wide margin between the UK and the US, yet the two nations were equal global leaders in manufactured output per capita.
According to Bairoch, the level of industrialization of Canada was far below that of Sweden and Spain, and was slightly better than Italy, which contradicts the ides presented by Maizels. Bairoch’s analysis was based on the evaluation of levels of production in food processing industries by looking at the consumption levels.
By the early 1890s, the most valued export product for Canada was cheese. This is because just about 10% of the cheese produced was consumed locally, with 90%. This presents one of the flaws in Bairoch’s estimations of the output of food processing industries. In addition to this, Canada was also a significant producer of pork, and a key exporter for the British market.
The lumber milling industry also exported most of its products. The analysis of Bairoch rated Canada at a lower industrial level than most European countries because his output assessments were based on employment statistics (Bairoch 215), which significantly undervalued the primary industries in Canada.
Bairoch also shows a cavalier treatment of traditional industries, which include tanneries and associated industries like shoe making. The tannery business was vital for Canada in the late nineteenth century as was seen in Canada’s self sufficiency in shoe manufacture due to the factories that introduced cutting, sewing and welting machines. Leather was a valuable commodity in the world in nineteenth century economies, and Canada had become a key producer of tanned leather and its products including belts and harness.
The Canadian tan industry obtained its raw materials from South America for processing. Besides shows, harnesses were also in demand due to the expanding agricultural activity and the use of horsepower in various processes. Bairoch’s assessments suggest that these industries did not produce adequate output, and their level of contribution to the Canadian economy was similar to that of clothing and timber (Bairoch 311).
On the contrary, Urqhart proposes that the Canadian clothing industry contributed about 11% of its manufacturing GDP in 1890. While the textile industry in Canada was quite significant, primary textile manufacturing was still slow since it relied heavily on imports.
However, Canada met the local demand for clothing through small, craft tailoring and dress making shops, which was also apparent in other nations at that time. “Relating Canada’s output of manufactured clothing to primary textile production in the country produces a bias on the clothing sector of Canadian manufacturing” (O’Brien and Keyder).
Bairoch was also biased on his evaluation of the Canadian iron and steel products. The analysis of Bairoch focused on primary iron production, through the British method of coke smelting. This analysis was biased against Canada, which did not introduce modern iron industries until the close approach of the twentieth century. Most of the iron used in Canada was imported, though there was little supply produced using charcoal fuel.
There were a few industries involved in open hearth processing of steel from imported pig iron, as well as steel fabrication for the production of bridges, boilers and steam engine, and other structural steel. The Canadian fabricating industries were also involved in the production of locomotives and railway car wheels and axles, and a variety of machinery manufacturing (Bairoch 320).
The analysis by Bairoch raises the net domestic consumption of primary metals by a factor, in relation to the value of pig iron, which underestimates the level of manufacturing in Canada. Bairoch’s valuation of Canada’s steel industry cannot be accurate because the construction of the extensive railway system of Canada alone took up a lot of iron and steel products, even though Canada was still importing rail.
Studies also show that the thriving agricultural sector in Canada made intensive use of iron and steel products in the form of ploughs, harrows, chains, and mowers, among others (Bairoch 321). Bairoch seems to have overlooked the large Canadian industry involved in iron and steel fabrication, and focused on the fact that it did not produce primary iron (Bairoch 324).
Based on the arguments expressed above, it can be deduced that the per capita output of manufactured goods in Canada in 1890 was much higher than noted by Bairoch. The assessment used to contradict Bairoch’s arguments is also opposed by Bairoch because it is modern.
Bairoch argues that the modern methodology used to evaluate industrial sectors based on quantity indices of manufacturing industries is inefficient in the analysis of industrial sectors before the 1950s. Instead, he proposes his tactic is better since it focuses on evaluating the most prominent sectors globally (Bairoch 328).
Recent comparisons of the strength of economies such as those assumed by Maddison take account of purchasing power parity (PPP) in comparing GDP figures. Maddison’s analysis suggests that the price levels in Canada and the United States were similar before 1890. Maddison also employs an adjustment exchange rate in the evaluation of European economies, which places the manufacturing output of Germany close to that of Canada.
However, this analysis was observed to be biased due to the assumption “an inter-country adjustment for differences between market exchanges for differences between market exchange rates and those based on PPP that are calculated for relatively recent years remains valid back over long spans of history” (Maddison).
In conclusion, the estimations and approximations indicate that Canada was a relatively highly industrialized economy by 1890. Compared to other economies in the world at that time, it ranked fourth, after the UK, US and Belgium in term of manufacturing output per capita.
Contrary to arguments by authors like Bairoch, Canada had a larger output per capita of manufactured goods than Germany, France, and Sweden. Before the twentieth century, Canada’s economy had a large agricultural and other primary sectors, though its construction had been low, which caused various economic historians to argue that Canada did not industrialize until the twentieth century.
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Cameron, rondo. “A New view of European Industrialization.” Economic History Review (1985): 38(2), 1-23. Print.
Chandler, Alfred. Scale and Scope: the Dynamics of Industrial Capitalism. Cambridge, Mass: Belknap Press, 1990. Print.
Maddison, Angus. Monitoring the World Economy, 1820-1992. Paris: OECD, 1995. Print.
Mitchell, B.R. International Historical Statistics: Europe, 1750-1993. New York: Stockton Press, 1998. Print.
O’Brien, Patrick and Caglar Keyder. Economic Growth in Britain and France, 1780-1914. London: Allen and Unwin, 1978. Print.
Temin, Peter. “Steam and Water Power in the Early Nineteenth Century.” Journal of Economic History (1966): 26, 187-205. Print.