The Economic Fortunes of the Maritimes, British Columbia, and the Prairies Were, Henceforth, to be Welded to those of the Central Canadian Provinces by Central Government Action

These commercial empires frequently competed with their expanding southern neighbour for migrants and the trade of the continental interior. Unlike the Mississippi, the St Lawrence was not an easy river to navigate. Improvements were required to remain competitive, first canal-building in the 1830s and 1840s, and then, in the 1850s, the Grand Trunk Railway from Montreal to Toronto – which enjoyed support from the recently united Province of Canada, and attracted British capital. Until the 1840s the Laurentine system had been assisted by preferences in the British market on Canadian timber and wheat. Britain’s adoption of free trade ended this advantage. The railway programme of the 1850s was, in part, a response to the ending of the British preference. A further response came in the 1854 ‘reciprocity treaty’ conceding freer entry to Canadian produce into the United States.

The abrogation of this treaty in 1865 ushered in a new era in British North American political economy which was to last until 1914. The perceived need for a new market to make up for the supposedly lost trade was one force driving the formation of the Dominion of Canada in 1867. The economic fortunes of the Maritimes, British Columbia, and the prairies were, henceforth, to be welded to those of the central Canadian provinces by central government action. This project in transcontinental national-building had a number of elements. Firstly, a measure of protection had been adopted by the old province of Canada in 1859, and the new federal government extended this to the new Dominion. Tariff barriers were further increased by prime minister John A. Macdonald in 1878 as a major component of a ‘national policy’ which came to be seen as a means to secure a separate economic and political fate on the North American continent. Secondly, from 1872, a federal land act allowed settlers access to land on easy terms in the west, which had to be populated if it was to provide a market for central Canadian industry, and if the projected nation was to become a reality. Finally, a national economy required unifying transport links. As a result railway construction formed a further plank of the national policy. In the 1870s a state-owned line linked central Canada and the Maritimes (its route was heavily influenced by strategic considerations, and it rarely generated profits as a result). A second line was to cross the prairies to British Columbia. In the early-1870s the proposal was mired in controversy, but in 1881 it was begun by a syndicate of Canadians and Americans. Completed in 1885 (and drawing heavily on British capital), the Canadian Pacific Railway (CPR) relied heavily on state support, receiving 250 million acres of land, $25 million in cash, and 700 miles of already completed lines.

--Andrew Dilley, Finance, Politics, and Imperialism: Australia, Canada, and the City of London, c.1896-1914, Cambridge Imperial and Post-Colonial Studies (Houndmills, UK: Palgrave Macmillan, 2012), 30-31.