Canadian Historic Sites: Occasional Papers in Archaeology and History No. 8
by John P. Heisler
Canals and the Commercial Development of the Canadas, 1791-1841
John Graves Simcoe, Upper Canada's first lieutenant governor (1792-99), believed that the St. Lawrence must be the great highway and transportation route into and out of the unexploited interior of the continent. He envisaged the bulky products of the interior flooding down to Montreal after having been exchanged for British manufactures in Upper Canada. At the time of Jay's Treaty in 1794, Britain, recognizing the impossibility of enforcing mercantilistic controls upon intercourse between the United States and Canada west of Montreal, agreed to reciprocal equalized customs duties. For a few years following the treaty large quantities of British and West Indian goods were sold in the lakes district, since transportation costs from Montreal to Kingston were about one-third of those from Albany to Oswego. Meanwhile, commencing in 1792, the state of New York started to build canals. Three years later the London merchant, Brickwood, reported that the Americans were improving their inland navigation by the Mohawk,1 and in 1801 Sir Alexander Mackenzie warned that the New Yorkers were projecting a canal from Albany to Lake Ontario.2 Mackenzie was opposed to English capital financing the projected American canals and he expanded upon the natural advantages of the St. Lawrence, at the same time suggesting ways and means of improving this waterway. Both men believed that the Canadas must construct an enlarged system of canals if they were to counter the American threat.
During the last decade of the 18th century, goods from Montreal destined for Upper Canada were carted to Lachine, the location of the first rapids. There the goods were loaded into batteaux for the river voyage to Kingston. Several batteaux usually left Lachine in company in order that the crews might combine their strength in pulling each boat up the rapids. At each rapid the batteaux were lightened and a portion of the goods carted to a landing above. A few men remained in each batteau to keep it away from the river bank while the others on shore towed it up the current by means of a rope fastened to the bow.3 The standard of weight for merchandise was a barrel of rum, which cost from $3.00 to $3.50 to carry from Lachine to Kingston,4 and this was the scale used in regulating the cost of transporting other goods.
The beginning of the 19th century found an increasing number of larger boats using the St. Lawrence. The "Kentucky" boat carrying between three and four hundred barrels of flour now appeared on the river between Kingston and Montreal. This traffic, however, found the existing canals antiquated and inadequate and the Canadian merchants became concerned about the weaknesses of their transportation system. By 1800 the imperial government had already authorized Gother Mann to inspect the canals and report on their condition;5 as a result of Mann's report some improvements were made.
Upper Canada's trade was now rapidly expanding. The value of the province's exports for 1801 was estimated as amounting to £105,000 currency.6 The total value of British imports from Canada for that year, one-third of which was made up of furs, was estimated as £600,000 currency.7 At that time Canadian produce sold to the British government, as stores for the local garrisons, for example, was estimated at another £600,0008 making £1,200,000 currency, for which bills could be drawn on Britain to pay for Canadian imports and other obligations.
During the Napoleonic Wars Britain discovered that she needed all the lumber and grain that the British North American colonies could produce and attract from American ports. In 1807, therefore, an imperial statute permitted the entry to British colonial ports from the United States of wood products and naval stores. The products flowed from the American states through the British provinces to Great Britain and this flow increased after December 1807 when the American government, in applying the neutrality laws, placed embargoes on export and import trade. From this time on Britain maintained preferences for colonial timber, a steady supply of which was so important to a wooden navy and merchant marine.9
Until the opening of the Erie Canal in 1825 nearly the whole of the trade of the country bordering on the St. Lawrence, Lake Ontario and the upper lakes found its way to the ocean via Montreal and Quebec. And it is probable that it would have continued to do so had it not been for the construction of the Erie Canal which, by affording a safe and commodious inland water communication from Buffalo, secured to the Americans the transport of nearly all the products of the western country, thus depriving the Canadian provinces of the advantage they had previously enjoyed.
With the conclusion of the War of 1812, the fertilizing stream flowing from the British military chest dried up, and the provinces had to depend once more upon their own natural resources and their connection with foreign markets.10 Fully appreciating the importance of canals to the agricultural and commercial development of the country, the provincial governments ordered investigations made from time to time into the cost of improving the water communication. We have already noted how in 1817 the breadth of the military canals at the Cascades, Split Rock and Coteau du Lac was doubled and their depth increased to 3-1/2 feet in order to admit Durham boats and large batteaux capable of carrying 100 barrels of flour.11 But even these improvements did not long meet the needs of the traffic. In 1818 the legislature of Upper Canada requested the co-operation of Lower Canada in an undertaking to improve the navigation of the St. Lawrence.12 Both provinces appointed commissioners to consider the advisability of building canals above Montreal and the following year they presented a joint report.13 Concern about the projected Erie Canal influenced their conclusions. The commissioners urged that the proportions of the Canadian canals and locks should be at least equal to those of the New York canal; that is, 28 feet wide at the bottom and 4 feet deep; locks 90 feet in length and 12 feet wide in the clear. No immediate action was taken, however. One prominent Upper Canadian, keenly interested in the navigation of the St. Lawrence, complained that when visiting in Lower Canada in the summer of 1821 he inquired after the Lower Canada commissioners and learned from one of them that they were really quite inactive and did not intend to become involved in a matter they knew nothing about and in which they were little interested.14 Upper Canada, however, was vitally interested and in this same year (1821) a select committee of the assembly referred to improvement of the navigation of the St. Lawrence as "The great and indeed only efficient measure by which . .. a permanent relief can be afforded to the commerce of Upper Canada and the safe, easy, expeditious and economical exploitation of our staples to the markets to which we have had access."15
We have already seen how prominent merchants like Adam Lymburner and John Richardson had, during the final decade of the 18th century, urged the construction of a canal at Lachine and how the project was left in abeyance due to lack of public support until the transport difficulties encountered during the War of 1812 impressed upon the government the need for improved communication with Upper Canada.16 The navigation of the St. Lawrence from Montreal to Lachine, a distance of about 10 miles, was very difficult owing to the rapids and shallowness of particular parts. It was understood by all that the construction of a canal at Lachine would naturally facilitate the conveyance of stores to Upper Canada and supersede the expense and delay of a portage of nine miles.
In 1821 the legislature of Lower Canada appropriated £35,000 to the construction of the canal and, at the same time granted free passage to all boats of His Majesty's service on condition of an aid of £10,000 from the British government.17 The first sod for the Lachine Canal was turned on 17 July 1821. Being considered "a work of great public importance and expectancy as well as forming an era in the improvement of internal navigation in the province, it was judged expedient that it should commence with appropriate form and ceremony."18 On that day a group of people comprising the commissioners (appointed by the legislature to superintend the completion of the work), secretary, engineer, contractors, labourers, proprietors of land and others along with the band of the 60th Regiment, assembled at picket No. 18 to participate in the ceremony.19 When completed in 1824 the canal was about 8-1/2 miles long with 28 feet breadth at bottom, 48 feet at water surface through earth and 36 feet at water surface through rock. It was provided with 7 locks of cut stone, each 100 feet long, 20 feet wide and with 5 feet depth of water.20 According to the governor-in-chief, the Earl of Dalhousie, the locks were of "the finest masonry I ever saw,"21 and John Richardson, one of the commissioners, stated that "substance had been preferred to show."22 Though opened in 1824, vessels did not pass through till 1825 since the shipping companies had previously contracted for the cartage of their goods over the portage for the year 1824. Once constructed, the Lachine Canal, "the only important project in the field of canal transportation undertaken by Lower Canada in the period before 1840" served as an important link both in the Ottawa-Rideau system and in the St. Lawrence route. Yet in time it came to be the bottleneck of the entire St. Lawrence system, carrying only 91,862 barrels of flour and 293,968 bushels of wheat during 1832 which was a better than average season.23
Throughout the 1820s an acrimonious debate went on between Great Britain and the United States with respect to the regulation of trade. Huskisson's Acts of 1822 and 1826 enlarged the scope of preference but ended for several years the previous arrangement for exporting American goods through the St. Lawrence. The American government requested Great Britain to open the river from the lakes to the ocean to American vessels but this request was refused. Finally in 1827 imperial legislation once more opened the St. Lawrence to American export trade.24 By that time, however, the subject of the navigation of the St. Lawrence had become involved in international politics. Americans now began to enunciate the right of the United States, based on appeal to "natural law," to the free navigation of the St. Lawrence from its source to its outlet. The Americans also held that free navigation of the river had been secured to them by treaty.25
The reception accorded in the Canadas to Huskisson's Acts disclosed the divergent economic interests between the merchants and the farmers. Commenting on the Canada Trade Act in 1822, the Upper Canada Gazette and Weekly Register declared that "the Trade Act, which exacts a duty of American produce, holds out great, nay every advantages to this Province." Later the Montreal Gazette of 18 May 1826, commenting on the several trade acts, declared that whereas Upper Canada had expressed approval of the legislation, Lower Canada had disliked the heavy duties on American lumber and agricultural produce. This newspaper implied that Lower Canada was united in its dislike of the legislation, though such was not the case. There, as in Upper Canada, the agricultural interests strongly favoured it. Memorials from agricultural interests in Lower Canada praised the Acts of 1825 for the protection they afforded Canadian agriculture against American supplies. "Even in the columns of the Montreal Gazette itself a correspondent pointed out that the urban population of Lower Canada numbered probably only 39,000 out of an estimated total of 400,000; and asked why Great Britain should oppress 361,000 farmers for the sake of the Canadian merchants."26
On 23 January 1826, the Montreal merchants held a meeting at which they expressed through a series of resolutions their dissatisfaction with the trade acts. Once again they enunciated their belief that the St. Lawrence was the natural outlet for the raw products of the interior of the continent. They complained that by placing duties on American flour at the inland port of entry and by prohibiting the importation of products such as beef and pork into the British possessions, the trade acts simply drove the produce of the interior down the new American canals.27 However, modifications of the new trade laws were not long in coming. The imperial statute of 1826 permitted the importation into Canada of salted beef and pork duty free for exportation only to Newfoundland via the warehousing port of Quebec. Imported flour ware housed at Quebec enjoyed an imperial preference when shipped direct to the British West Indies while American flour bonded through from the inland ports to Quebec, did not pay the regular duty. A further imperial statute of the following year (1827) admitted American timber, lumber, tallow, fresh meat and fish duty free when brought by land or inland navigation. Foreign produce could be warehoused at the free warehousing ports for exportation anywhere. Kingston and Montreal were to be the warehousing ports for goods entering Canada by land or inland navigation. American goods entered at western frontier ports could be bonded through without payment of duty. The Acts of 1826 and 1827 also laid down that timber, lumber and potash imported into Canada by land and inland navigation were to be deemed Canadian produce when imported into Great Britain. This meant that hence forth "some American commodities entered Canada duty free, others escaped the new tariff through the bonding system; and in addition there were a few important products which acquired Canadian status by the mere passage down the St. Lawrence."28
Meanwhile there was considerable public discussion regarding the St. Lawrence navigation. The Quebec Mercury of December 1824 carried a letter to the editor expressing some of the views and intentions of a group of gentlemen who organized a St. Lawrence Association.29 The association set itself the task of inquiring into the most feasible methods of improving the navigation of the St. Lawrence through the whole length. The members of the association were hopeful that the discerning inhabitants of the two provinces would zealously support such a measure. A few years later, the Montreal Gazette of 29 March 1831 quoted from a reprint of a circular on improvement of the navigation of the St. Lawrence River addressed to the members of the legislature of Upper Canada.30 The circular was written by W. H. Merritt and dated at St. Catharines, 15 February 1831. Merritt maintained that this subject was the most important measure of all for the future welfare and prosperity of the Canadas. The unnatural division of Upper and Lower Canada deprived Upper Canada of a seaport town or commercial city and the province could increase neither in population nor wealth in proportion to its natural advantages until it enjoyed a free and uninterrupted access to the sea. A difference of opinion existed, however, as to the best method of effecting that object. Some contended that the Rideau Canal, then on the eve of completion, would remedy every convenience. Others asserted that a navigation between Prescott and Montreal, from the cheapness of its construction, would be preferable. Merritt pointed out that Lake Ontario was already connected with the Hudson River by the Erie Canal 208 miles long, 574 feet lockage and 4 feet depth of water. The Rideau route when completed would be over 200 miles long, over 500 feet lockage and 5 feet of water. The St. Lawrence, however, would be only 120 miles of artificial navigation containing less than 200 feet lockage; or, in fact, a canal of 37-1/2 miles in length would connect Lake Ontario with the ocean. One objection raised against a ship canal was the inability of the province of Upper Canada, with her heavy debt, to complete it. Merritt estimated the cost based on surveys at £750,000. This sum he expected could soon be paid off by merely carrying the same quantity of merchandise and produce as was then transported on the St. Lawrence and charging the same tolls as on the Erie Canal; this even making allowances for the trade which would be diverted on the Rideau. Such a canal of suitable dimensions would make a seacoast of the inland lake shore. The route would then be used by the American Midwest, for no other could successfully compete with it. Merritt suggested that the province could undertake the project alone, using its credit to obtain the necessary money, and become the proprietor on the same principle adopted by New York state in constructing the Erie Canal. Or, should the province refuse to shoulder the burden, it could incorporate a company with a capital stock of £750,000 with individuals and provincial government subscribing to the stock. According to Merritt this improvement should have been commenced long since, and it was a reflection upon the intelligence and enterprise of the country that this had not been done.
Yet nothing was done till 1833 when the opening of the Welland Canal the previous year provided a stimulus to the improvement of the St. Lawrence below it. In that year Upper Canada passed "An Act granting to His Majesty a sum of money to be raised by debentures for the improvements of the navigation of the River St. Lawrence" (3 Wm IV, C. 18). The Act pointed out that it was highly important to the economy of the province that the navigation of the St. Lawrence should be improved and that it was expedient to raise a sum of money by way of a loan for this purpose. The receiver general was therefore authorized to raise £70,000 by debentures for this purpose. At the same time two commissioners were appointed whose duty it was to obtain a survey or surveys and a plan or plans of improvements by canals and locks to be made in the navigation of the St. Lawrence between Prescott and the eastern extremity of the province. The legislatures of both provinces now proceeded to obtain information and professional opinion in the matter. Two American engineers were asked to examine the St. Lawrence waterway and report on the practicability and the probable expense of improving it by means of canals. In April 1834 one of them wrote, "It is certain to my mind that with such a canal as I have projected along the St. Lawrence, and Welland Canal in good order, that all the products of the soil from all the upper Lakes can be carried to tidewater a good deal cheaper by this route than can ever be done by the Erie Canal or any other work."31
During this same year (1834) work was begun on the one major canal project undertaken in Upper Canada before the union of the provinces. The Cornwall Canal on the north side of the St. Lawrence extending from Cornwall to Dickinson's Landing was designed to avoid the Long Sault Rapids at the head of Lake St. Francis. In 1816 the legislature of Upper Canada discussed the matter of building a canal at this point, and two years later it was one of the subjects dealt with by a joint commission appointed by the legislatures of both provinces to report on the water communication of the upper St. Lawrence. Construction of canals on this stretch of the river, to be not less than 4 feet deep and to cost $600,000, was recommended. Yet nothing was done, though in 1826 the lieutenant governor submitted a report of Samuel Clowes which outlined two plans, one for a canal with 8 feet depth of water and one for a 4-foot waterway.32 In 1830 the town of Brockville, fearing that the Rideau-Ottawa system of canals would draw traffic away from the St. Lawrence and thus adversely affect the commercial life of the town, had a survey made for a canal around the Long Sault Rapids and pressured the legislature to take action in the matter.33 In 1832, therefore, the legislature passed a resolution favoring the construction of a canal having 9 feet of water. Two engineers, Benjamin Wright and John B. Mills, submitted plans for the Cornwall and Williamsburg canals. The canals projected by the Canadas at this time were planned under one direction and formed virtually a single scheme; the plans called for canals of 9 feet depth throughout, 55 feet wide and 200 feet long. The gross estimate for the works in Upper Canada came to £350,000 and the cost of improvements in Lower Canada was expected to total at least £235,782.34
The legislatures of Upper and Lower Canada reacted differently to the proposed construction of these canals; this difference reflected the divergent economic interests of merchant and farmer. The Upper Canada legislature, controlled by the economically minded Tories, authorized the construction of the Cornwall Canal which was begun in 1834.35 To finance the project the province floated a series of loans in London. The Reformers in the assembly, representing the agricultural interests, professed to be horrified by any such increase in the public debt and advised delay in construction of the canal.36 However, the unsettled political situation culminating in the Rebellions of 1837, combined with the severe depression which set in at that time, made it impossible for the province to sell its bonds. Work on the canal was therefore suspended for some years and was not resumed until after the union. In Lower Canada, where agricultural and professional interests controlled the assembly, no action was taken in the matter. To the French Canadian debts were always burdens. One member of the commercial community speaking in the Lower Canada assembly declared, "The question was whether by borrowing we did not enrich ourselves."37 Another prominent member of the Lower Canada commercial group wrote:
The Tory parties in both provinces closely connected as they were with the business community, advocated a policy of public works and the economic development of the country by private capital and public expenditure. One prominent Upper Canada Tory politician wrote to the civil secretary of the province in March, 1834, urging that the St. Lawrence canals must be pushed forward as the best security for his party's success in the approaching election.39
A new era in canal construction dawned with the arrival in 1838 of Lord Durham as governor general of the British North American colonies. Realizing that the commercial and agricultural depression helped to foment political unrest, he urged the British government to complete the St. Lawrence canal system.40 At the same time Durham instructed Lieutenant Colonel Phillpotts of the Royal Engineers to prepare a report on the inland navigation of the Canadas.41 In his two able reports on the subject, Phillpotts maintained that only the completion of a series of canals between Lake Erie and tidewater would assure prosperity to the Canadas. "Unless," he asserted, "we open an uninterrupted navigation for large freight steamers capable of carrying a cargo of at least 300 tons without trans-shipment before they arrive at Montreal or Quebec, we have no chance whatever of securing any great portion of that vast and important trade which must ere long be carried on between the Western States and the Atlantic Ocean."42 He urged that the Welland and Lachine canals be enlarged to a depth of 9 feet and that the Cornwall Canal be completed as quickly as possible.43 In conclusion Phillpotts strongly recommended the immediate construction around the remaining rapids on the St. Lawrence of a series of canals with the same dimensions as the Cornwall.44 And there the matter of the St. Lawrence canals remained until the formation of the new Province of Canada in 1841.
The years immediately following 1815 found Upper Canada deep in the throes of an economic depression. In 1821, therefore, an informed observer could write: "Most of the merchants have many large outstanding debts which, if collected by means of suits would ruin two-thirds of the farmers of the Province; and should the Montreal wholesale dealers have recourse to similar measures, many of their correspondents would become insolvent likewise."45 Already in 1817 the Americans had begun to build the Erie Canal. This greatly alarmed the Upper Canadians for such a canal would in all likelihood divert much of the upper lake traffic to New York and away from the St. Lawrence route. The building of the Erie, however, fired the imagination of one Upper Canada businessman, W. H. Merritt, who decided to emulate it by a canal based on the Welland River which would circumvent impassable Niagara. The Niagara peninsula, a neck of land 27 miles wide, separated the waters of Lakes Erie and Ontario and was a barrier to water communication between the upper lakes and the sea. Lake Erie was 300 feet higher above sea level than Lake Ontario, and the two were connected by the Niagara River with the falls marking the difference in level. It took Merritt from 1818 to 1829 to effect construction of an artificial waterway connecting the two lakes. But still more was required and in 1830 it was decided to undertake the construction of a new section of the canal which would provide a direct entrance to Lake Erie. This new extension would avoid relying on the dangerous and inconvenient navigation of the Welland and Niagara rivers. In 1832 work was pushed forward on a direct cut to Lake Erie which was completed by March 1833. There was now a direct line of navigation from Port Colborne on Lake Erie to Port Dalhousie on Lake Ontario, a distance of 28 miles.46
A line of boats was now organized to make daily trips between Grand River and Port Dalhousie. The Welland Canal Company announced that "an effort will be made in ensuing season to procure a sufficient number of vessels to leave Prescott every day if not oftener for Port Dalhousie, thence to Sandwich, touching at the intermediate ports on Lake Erie."47 Such measures were an attempt to deflect the lake trade away from the Erie Canal and the Niagara portage.
The Welland Canal, however, never really enjoyed "a high volume of remunerative traffic." In the early years, lake shippers showed a lack of confidence in the canal. Mishaps, malicious rumours and lack of adequate credit and transportation facilities on the line of the canal discouraged Lake Erie forwarders from patronizing it. Upper Canada commercial centres along the canal, like St. Catharines, "could not compete with the commercial credit extended by Buffalo mercantile houses backed by the resources of the New York market."48 Moreover, there was at first a lack of vessels designed for the double voyage on the lakes and the navigation of the canal. It seemed that the Welland would not be able to break the Erie's monopoly of the Ohio trade.
Yet the canal did bring in some revenue. During its first two seasons tolls amounted to £3,667 and the company stated hopefully that "the increase alluded to is entirely exclusive of the New York trade, scarcely a ton of which passed this route last season . The transit is wholly from Upper Canada and to and from Oswego principally wheat down and salt up. This trade is confined to Lake Ontario; and from the number of superior flowing mills recently erected at Oswego cannot fail of increasing to an immense extent."49 It was hoped, however, that once the Lake Erie cutting was completed and the direct Lake Erie line was open, there would be an increase in American traffic. In 1832 traffic increased somewhat, a significant feature being an increase in wheat from American ports amounting to 100,000 bushels.50
Upward traffic was principally salt, 35,000 bushels of which passed through the canal during the year.51 The next few years witnessed an encouraging increase in traffic. Whereas tolls in 1833 totalled £3,618, in 1834 they increased to £4,300 while a total of 570 schooners, 334 boats and scows and 66 rafts passed the canal. In 1833, tolls were paid on 9,611 barrels of pork and 30,942 feet of square timber whereas in 1834 toll was collected on 23,422-1/2 barrels of pork and 392,055 feet of square timber.52
The Grand River Navigation Company, active in developing the western part of Upper Canada, was responsible for part of the increased traffic.53 Part of the increase also represented the Welland attracting some of the Ohio-New York trade. "Of the 264,919 bushels of wheat which passed the canal during 1834, only 18,464 came from Canadian ports on Lake Erie; the remaining 246,455 bushels came from American ports and of these 234,285 were consigned to the New York market by way of Oswego."54 Actually the Welland did more to swell the traffic of Oswego (and New York) than that of Montreal, since the route from Lake Ontario by the Rideau Canal and the Ottawa River was roundabout while the passage down the St. Lawrence from Lake Ontario to Montreal, even with canals at the most difficult parts, was risky for men, boats and cargoes. Equally encouraging in relation to increased traffic was the fact that by the end of 1834, Canadian and American shipyards were constructing new vessels designed specially for the Erie-Ontario trade.
By this time it was clear that the Welland Canal stimulated the development of the country adjacent to it. The canal spurred on the inhabitants in the more remote areas to improve the rivers and streams flowing into Lake Erie in order to avail themselves of the advantages afforded by the canal. This improvement in the more remote waterways tended to create new sources of trade.
The 1835 season witnessed a three-fold increase over the previous year in the amount of produce passing the canal and an increase in the tolls from £4,300 to £5,807.55 However, the outlook for the canal was far from cheerful. Repairs and improvements were needed but the company had no funds. In 1835 and again in 1836, the directors resorted to printing their own money in the form of promissory notes redeemable in one year, in order to finance temporarily the operation of the canal.56 But this was not enough. An interruption in the flow of government assistance in 1836 resulted in the canal being closed for 93 out of 184 working days when it should have been open for navigation. After being in use for nearly a decade the wooden locks were, in 1837, rapidly decaying and required immediate replacement. "Stopgap aid, humbly petitioned for by the board and grudgingly granted by small minorities in the Assembly would no longer suffice. What was required was nothing less than a complete reconstruction on a permanent basis."57 In 1837 the legislature passed an Act which converted all previous loans into stock. The Act also provided for an additional subscription for the completion of the canal in a desirable manner with stone locks and also for a complete survey of the canal by two competent engineers.58 N. H. Baird and H. H. Killaly were appointed to make a complete survey and they submitted a report in 1838.59 They recommended no drastic changes in the plan of the canal but only enlargements, the total cost of which was estimated at just over £300,000.
It was about this time that the imperial government intervened. As already noted, Durham selected Phillpotts to make a survey of the inland navigation from Lake Erie to tidewater. In his first report dated 31 December 1839, Phillpotts strongly recommended that the Welland Canal should be reconstructed with stone locks on a much larger scale. Wishing to emphasize the commercial value of the canal, Phillpotts urged that enlargement was essential and must not be postponed.
By now the canal was in such poor condition and capital was so desperately needed that the director of the Welland Canal Company recommended that serious thought should be given to the abandonment of the canal as a navigable waterway and use it as a source of water only. With the formation of the new Province of Canada in 1841, the canal was placed under the direction of the Board of Works and in September of that year the legislature voted £450,00061 for the canal's reconstruction and enlargement. At the same time the New York stockholders of the old Welland Canal Company were compensated for their investment in what they described as a "public work which for usefulness and profit, under proper management, is not equalled in America."62
We have seen how the Upper Canada legislature believed that the Ottawa-Rideau route could never compete commercially with the St. Lawrence. We have also seen how Colonel By believed the exact opposite, and how when planning the Ottawa-Rideau waterway he was moved by commercial as well as military considerations. On 13 July 1825, By recommended the creation of an uninterrupted steamboat navigation from Quebec to Lake Superior by enlarging the locks so as to allow the passage of steamboats then being built for the navigation of the Great Lakes.63 Use of such vessels, measuring from 110 to 130 feet in length and from 40 to 50 feet in width and drawing 8 feet of water when loaded, would, By believed, give Britain possession of the trade on the borders of the lakes and completely nullify the strong efforts the Americans were making to dominate the trade by constructing canals. The lakes area, with its dense population, could then serve as a great outlet for British manufactured goods.64 Moreover, during this period the commercial intercourse between Upper and Lower Canada via the St. Lawrence meant passing through waters over which the Americans claimed jurisdiction; the navigable channel of the St. Lawrence in the neighbourhood of Cornwall. By hoped that the Ottawa-Rideau waterway would prevent the critical trade between the two provinces from getting interrupted by the Americans.65
With the opening of the Rideau Canal in 1832, inbound cargoes used this waterway to the lakes from the St. Lawrence and Ottawa, and only outbound cargoes followed the risky route down the rapid stream of the St. Lawrence with its small inadequate canals. A heavy traffic now developed over the Ottawa-Rideau waterway between Kingston and Montreal. Forwarding companies were formed to engage in the trade. One of these was McPherson and Crane (the Ottawa and Rideau Company) which at one time ran a line of 13 high-pressure steamers along with barges and batteaux between Kingston and Montreal. This company owned a private lock at the mouth of the Ottawa River, thereby overcoming the dangerous navigation at that place and enjoying a monopoly of the towing business till 1841, when Captain R. W. Shepherd in the steamer St. David discovered a safe channel through the rapids at Ste. Anne.66
The construction of the Rideau Canal assisted in opening up Montreal's hinterland, thereby increasing the trade of that commercial centre. The mid-1830s found Lower Canada preparing for a substantial increase in trade notwithstanding the disadvantages of a periodically closed navigation, the distance of Quebec and Montreal from the sea, and the risk of delay and damage by ice in the Gulf of St. Lawrence. Large stores were built in Montreal and wharfage for boats and sea-going vessels was greatly extended. These operations and hopes of increasing commerce were partly encouraged by the rapidly increasing population and production of Upper Canada and partly by the new channels of communication opened up by the Welland and Rideau canals between Lower Canada and the American states bordering on the Great Lakes.67 As the Toronto Recorder pointed out in 1836, "It has been proved last season that the goods from Montreal can be delivered at Toronto in five days by way of the Rideau Canal at an expense of two pounds ten shillings per ton with a certainty of two and probably only one trans-shipment."68
Moreover, the Rideau Canal played a part in the beginning of an export trade in Canadian products to the United States. Prior to the 1830s "all exports to the United States had been merely British goods in transit."69 Contiguous Canadian and American territories produced the same products and there was little trade between them. However, with the rapid increase in population and the disappearance of the forest in the United States, Canada was drawn on for supplier of food and wood. A second market began to develop as the following two documents indicate. In June 1835 the Montreal Gazette printed the following excerpt from the Quebec Gazette,
A year later in May 1836 the same newspaper carried the following excerpt from the Kingston Herald.
However, a few years later Colonel Phillpotts, while viewing the Ottawa and Rideau canals as being most useful from a military point of view, "and in the event of war with the United States they would be invaluable," considered that commercially these canals were of little use. He believed that they were too circuitous and too impeded by lockage to compete with the American canals for the trade of the western states. He pointed out that some of the locks in the Ottawa canals "were too small for steamers and even if they were enlarged to the size of the Rideau locks they would be altogether too small for the steamers which navigate Lake Ontario and the Upper Lakes and therefore a trans-shipment at Kingston would be necessary."72 Though the military expert like Phillpotts might consider the Rideau Canal to have little commercial value, this view was not shared by the inhabitants of the province, who considered it to have great value, both military and commercial. Possibly no better expression of Upper Canada public opinion regarding the Rideau Canal can be found than that contained in a resolution passed at an agricultural meeting held at Richmond Hill in the Home District on 9 December 1840, to the effect "that the people of Upper Canada . . . considered the construction of the Rideau Canal at the expense of the British Government as a most valuable boon conferred upon them and a mark of the deep interest their Sovereign took in their welfare."73
Something must here be said of the relationship of the provinces of Upper and Lower Canada to the British imperial trading system, for upon that relationship depended to some extent their existence as viable communities.74 A new country enjoying abundant natural resources must be able to market its natural riches to progress economically. The principal products of the Canadas, indeed nearly the only products at this time, were wood, grain and, to a lesser degree, potash. The economic structure of the Canadas in the period under review was largely dependent on these commodities. The Canadas enjoyed a protected overseas market for these products due to the British preferential duties on colonial timber and grain.
During the Napoleonic Wars, wood had become the Canadas' most valuable product and came to form nearly two-thirds amounting in 1834 to £784,45775 of the value of exports to Great Britain whose taxpayer actually subsidized Canadian timber. So high were the differential duties on timber that Baltic timber was shipped to British North America and then reshipped to Britain since anything that touched colonial soil became colonial and was entitled to the preference. A fierce battle of vested interests in Great Britain waged about the colonial preference on timber lasting from about 1820 to 1846. Supporters of Baltic timber demanded abolition while the colonial interests insisted on continuance. The following account of a debate in the Upper Canada legislative assembly on 4 February 1831 presents the standard arguments against the repeal of the differential duties.
The Canadian timber industry at first developed in the form of square lumber both "because of the habit of the British market and because little fixed capital was necessary for getting it out."77 Later there grew a demand for sawn lumber and this developed as a second branch of the industry.78 Sawn lumber meant the construction of mills built along the main waterways since they had to ship by water in the export trade.79 In the mid-1830s traffic in sawn lumber began in the United States though on a much smaller scale than in Great Britain. Some lumbermen turned to the milling of cheaper boards and planks for American sale and this Canadian lumber was exported to the United States via St. Johns on the Richelieu, Kingston on the Rideau Canal route, or through the Welland to the Erie Canal.80 And while Canadian mills were beginning to produce for the American market, American lumber interests were starting to seek Canadian timber limits.81
The second major export product of the Canadas was grain. In this respect the British Corn Law of 1826 admitted Canadian grain exports to the British market upon payment of an import duty below that levied against foreign food stuffs.82 It was found, however, that notwithstanding this preference, at times Canadian grain could still be kept out of the British market due to high transatlantic shipping costs, poor Canadian harvests or low British prices. In 1830 the merchants of Quebec and the directors of the Welland Canal joined in proposing a radical reduction of duties on American wheat, grains and salted provisions brought into Canada by land or inland navigation.83 The following year they got even more than they had asked for. The Canadian Trade Act of 183184 allowed American wheat and flour to be admitted duty free to Canada for export via the St. Lawrence to markets overseas. American wheat could now be milled in Canada and qualify as Canadian flour. This piece of legislation, combined with improving world economic conditions after 1837, proved a boon to the St. Lawrence grain trade. It was estimated that in 1831, 81,144 barrels of flour were exported from Quebec of which 41,856 barrels had come from the United States by inland navigation.85 Three years later the Welland Canal carried 22,170 bushels of wheat to Montreal from American ports along with 18,464 bushels from Canadian ports.86 And in 1835 the Welland carried 18,917 bushels of wheat shipped to Montreal from the midwestern United States.87 Moreover, by 1839, 249,471 bushels of wheat, compared to 99,377 bushels in 1829, passed out of the St. Lawrence for markets overseas, and the following year the number had increased to 1,739,139 bushels.88 It was expected that this increase would continue. Such a rapidly increasing traffic put a severe strain on the existing inadequate St. Lawrence navigation and made improved canalization of the river above Montreal an absolute necessity; all the more so if the St. Lawrence route was to meet effectively the competition of the American Erie Canal route, For in 1834, at the same time as the Welland Canal carried 40,634 bushels of wheat for Montreal, it also carried 224,285 bushels for the American port of Oswego on Lake Ontario.89 And while the Lachine Canal carried 91,862 barrels of flour and 293,968 bushels of wheat in 1832, "in 1834 which was a relatively poor year, 977,027 barrels of flour and 748,433 bushels of wheat were transported by the Erie Canal to tidewater."90
The third major Canadian product for export was potash. Potash and pearl ash were by-products of clearing land for settlement. The hardwood which stood on fertile land was burnt and the potash and pearl ash extracted from the ashes. As seen in the following excerpt from the Montreal Gazette of 17 January 1824, this product was exported in large quantity.
The few years preceding the union of 1841, therefore, witnessed a commercial revival in the Canadas. There was noticeable improvement in trade and an increase in real estate values. There were good markets abroad for Canadian primary products, exports of which from Montreal and Quebec in 1841 were valued at over 2 million pounds, in which sum were included 356,210 barrels of flour and 562,862 bushels of wheat.92 This flourishing export trade was reflected by a rise in the tonnage of vessels clearing outward from Quebec from 354,739 in 1838 to 457,906 in 1840.93 At the same time there was a steady increase in traffic and tolls on the Lachine and Welland canals while the ports above Montreal were blocked with supplies of wheat and flour pouring in from the United States.94
The provincial finances, however, were in a less flourishing condition. The unfinished or imperfectly completed public works had been suspended for lack of funds. The interest on the loans made for such public works almost equalled the revenue of Upper Canada.95 Such revenue being derived principally from a low tariff was inadequate, it was estimated that in the last year before the union the combined provincial deficits equalled nearly £66,000.96 Canadian credit was shaky on the London market. "The two provinces went into union with an inadequate revenue, a broken credit and a combined debt of £1325,000 currency."97
It would appear then from what has been said that prior to the union of Upper and Lower Canada in 1841, canal construction served as a measure to promote both military defence and economic development in the provinces. However, as already pointed out, one can detect throughout the period a certain conflict of interests in regard to canal construction between the imperial government, preoccupied with the problem of defence and the survival of British power in North America on the one hand, and the political and commercial interests involved in regional economic development on the other. Each side tended to regard the construction of canals from its own point of view. Sir James Carmichael Smyth stoutly rejected for military reasons the opening of the Richelieu River by enlarged locks to allow steamboats to enter Lake Champlain and thereby secure for Quebec the commerce from that part of Canada and of the United States bordering on the lake.98 The military authorities vetoed the construction of the Beauharnois Canal on the south shore of the St. Lawrence though it would cost much less to construct it there than on the north side.99 Moreover, the military authorities were of two minds about the Welland which allowed naval vessels to pass from one lake to the other.100 On the other hand it was located on the Niagara peninsula which lay exposed to invasion from the United States.101 The military authorities continued to retain control over the small canals on the St. Lawrence which the commercial interests believed should be handed over to civilian control for better management.102 One prominent commercial man wrote in 1833:
Two years later, in March 1835, a memorial of forwarders, engaged in the carrying trade on the St. Lawrence between Upper and Lower Canada, was sent to the governor-in-chief, Lord Aylmer stating
Finally, there were also conflicting opinions regarding the best route of communication between the two provinces. The commercial interest preferred to use the more exposed St. Lawrence route to the secure but roundabout Ottawa-Rideau waterway constructed by the military for purposes of defence. Lower Canada constructed the Lachine Canal and Upper Canada the Cornwall Canal in order to improve the navigation along the St. Lawrence in response to the needs of trade and commerce.