SOURCE: "Harold Innis and the Unity and Diversity of Confederation," in Journal of Canadian Studies/Revue d'études canadiennes, Vol. 17, No. 4, Winter, 1982-83, pp. 57-73.

A prevalent view of the Canadian imagination, articulated by Northrop Frye, is that it has been dominated by a sense of dislocation occasioned by the enormity of the landscape and the sparseness of "civilization." Frye's view is that Canada has been seen as "a country of isolations and terror, and of the overwhelming of human values by an indifferent and wasteful nature." From this perspective Frye has claimed E. J. Pratt's "Brébeuf and His Brethren" as a statement of the central tragic theme of the Canadian imagination. The Iroquois are seen, in European fashion, as part of nature. Brébeuf represents an order which, through a hierarchical chain of command, extends outside of Canada to a civilization, and "head office," in Europe.

In Frye's view the central triumphant theme in the Canadian imagination also builds on the subject of "lines of communication," and "the theme of the epic act of communication in Canadian history, the linking of the east and west by a great railway, was thus also a logical one for Pratt to choose." In "Towards the Last Spike," Pratt portrays Macdonald's vision of the west:

Seizing a telescope, he swept the skies
The north-south drift, a self-illumined chart.

That stellar path looked too much like a road map
Upon his wall—the roads all led to market—
The north-south route. He lit a candle, held
It to a second map full of blank spaces
And arrows pointing west.

Macdonald's genius was to articulate an ideology of western expansion that would overcome all the obstacles, both natural and man made:

The words

British, the West instead of South, the Nation,
the all-Canadian route—these terms were singing
Fresher than ever....

Van Home, backed up by Shaughnessy and Stephen, overcomes the "reptile" shield, the "Laurentian monster," and then the "terror and beauty" of the mountain ranges to create a Canada a mari usque ad mare. It is a powerful theme and with only occasional dissent, such as F. R. Scott's "All the Spikes But the Last," has been renewed by writers as diverse as Gordon Lightfoot and Pierre Berton.

The vision owes much to Harold Innis. "Confederation," Innis declared, "has been to an important extent the creation of private enterprise represented by the Canadian Pacific Railway, supported by the federal government in a tariff and railway rate policy, and in the Canadian National Railways."¹ Innis also looked back beyond Confederation to see Canada as an extension of the St. Lawrence-Great Lakes water routes of the fur trade and even saw the North West Company as the "forerunner" of the Confederation that was consolidated by the CPR and the wheat economy.² But the celebration of Canada as the triumphant integration of a vast continental region by the heroic efforts of far-seeing merchants and politicians is a theme that belongs rather more to Donald Creighton than to Harold Innis. There are undoubtedly significant points of overlap between the work of Creighton and Innis. Both for example could see Canada and the United States as competing mercantilist empires. Creighton, however, writes from the political vantage point of the "imperial" centre, Montreal, Ottawa and ultimately London. Innis, in his concern to develop a theory of economic growth that encompassed the diverse regions of an economic empire had a keener eye for the ambiguities of empire.³

The line of analysis which flows directly from Innis' work situates the politics of Canadian nationalism and of federal-provincial strains in relation to the pattern of economic development in Canada. It thus evades a common pitfall in Canadian political history which is to trace Canadian politics, whether national or regional, in terms of the strength or weakness of European political ideas without linking the ideas to the nature of the European or Canadian social structures.⁴

Gerard Vano has recently examined regional tensions in Canada in the perspective of the "old Canadian ideology" which was "anti-Canadian" because based on an "internal distinction" of "feudal inspiration and derivation": "The raison d'être of the old order, the east-west trade in staples, has gone and with it went the unifying imperative and the will to sustain Confederation Canada."⁵ Paradoxically, Vano suggests, the hope for the future lies in "popular Canadianism" of "liberal inspiration." Paradoxical because it has been created by multinational corporations and Americanization.

Vano's charge against Innis is that "Canada has not been, as Innis, Creighton and the staple theorists would claim, a product of Europe," because "the staples system was not capable of producing the social machinery to popularize liberal values."⁶ But in Innis' sense Canada was a product of Europe. To say this did not imply a duplication in Canada of either European social structures or European ideas. Vano misses Innis' point about the differences between the centre and the margin.

Innis has been criticized recently by Professor Eccles for an "extreme" economic determinism⁷ and there is no doubt that he did build a very substantial castle on the limited infrastructure of his study of the fur trade, though he later added supports with studies of other staples. He was given to dogmatic assertions, often of a paradoxical nature, which are at times, as Donald Creighton said,⁸"extremely exasperating" and it is not likely that any one reader can follow him in all of his conclusions. But his extreme assertions are often completed by significant qualifications which offset the central conclusions. As William Westfall has observed, Innis' work is "especially valuable in an area in which the new regionalism is quite weak—the historical relationship between the regions of Canada and the Canadian nation-state. The unity of Canada, Innis argued, was not tied to the physical features of the land, but to a way certain features of landscape could be used in relation to a specific type of economic enterprise. Other types of enterprise could lead to different "geographical" configurations. Boundaries—whether national or regional—were not "in the land" but rather tied to the character of staple production."⁹

The staple theory provided an explanation for the unity of Confederation. Canada "emerged not in spite of geography, but because of it."¹⁰ But the staple theory also explains diversity and the strains that result from the experience of unequal development that is characteristic of empires.

Empires, as Innis' work leads us to see, create price systems which serve to define boundaries and which set up "centre-periphery" relationships within the boundaries. The "centre" or "core" country of the empire defines the price system by virtue of its ability to control the location of investment, international monetary policy and the rules of international trade. Its core status is maintained so long as it can wield the power to enforce those systems.¹¹

The Canadian economy can be seen to have developed as the British price system encouraged the production of a series of staples in the various regions of Canada. Situated at the periphery of the system, Canada attempted to create its own "second-order" centre or "metropolis," which in turn led to the problem of regional balance within the new nation. The difficulties were enhanced by fluctuations in the success and failure of particular staples and indeed of the international system as a whole, and ultimately the emergence of the United States as a rival for Britain's role as "core" country induced a dangerous, and potentially fatal, complication.

This paper explores the theme of unity and diversity in Innis' theory of Canadian economic development. The first section is concerned with the way in which staples have created regional economies. The second section takes up the analysis of the role of government in economic development and the third examines Innis' view of the epochal economic changes that were occurring in his own lifetime.

THE LOCATION OF ECONOMIC ACTIVITY

At one level the staple theory is a theory of the location of economic activity. Innis was, throughout his life, concerned with working out a theory of the economic development of what were commonly called "new countries."¹²He had set himself this task by 1929 when he wrote that "perhaps the most serious obstacle to effective work in Canadian economics and economic history is the lack of a philosophy of economic history applicable to new countries."¹³

There were available several schools of thought that might have been considered to be relevant to the Canadian experience. One of these was the "frontier theory" which stressed the determining influence of the evermoving margin of "civilization." Economically, the frontier theory stressed the self-sufficiency of an agrarian society, while politically it extolled the progressive and democratic aspects of the frontier. Innis rejected this approach for two reasons: firstly, because "Canada had no gradual development by which the frontier could exercise any continued and pervasive influence"¹⁴; secondly, and perhaps more importantly, because "the development of a new country means above all things continued relations, especially trade, with the old country."¹⁵ Innis did not by any means neglect the impact of the Canadian environment and geography, but he recognized the equally important point that the "frontier" was only the end of a long chain of commercial links that bound farmers and miners to merchants and bankers. The links extended through the Canadian cities and outside the country to the imperial centres. Canada was "fundamentally a product of Europe."¹⁶

To see trade as important was not a sufficient rejoinder to the frontier school. The view of Canada as a "product" of Europe emphasizes the point that trade was imperial trade and that the starting point of economic activity was not the "margin" but the "centre" of the empire. "Throughout the economic history of Canada, the dominance of water transportation in the Maritime Provinces and the St. Lawrence has accentuated dependence on Europe for manufactured products and for markets of staple raw materials . . . European markets and European capital dominated Canadian economic development through the background of water transportation."¹⁷ Innis, in 1930, was the first economist to use the centre-periphery framework.

This perception of empire differentiates Innis from W. A. Mackintosh. In 1922 Mackintosh had indicated the significance of staple exports in his lecture, "Economic Factors in Canadian History."¹⁸ He acknowledged the work of the American historian G. S. Callendar on colonial economic development and the role of staple products which had enabled pioneer communities to "come into close contact with the commercial world and leave behind the disabilities of a pioneer existence."¹⁹ The perspective is that of the colonial society seeking out a suitable staple product and then developing the necessary transportation routes to send the product to market. Mackintosh stressed the fact that transportation became a problem as the North American colonies moved inland from the Atlantic coast. In Canada the Laurentian Shield posed a formidable barrier until the CPR made possible the opening of the west. "Canadian nationality was assured" with the world staple of western wheat and thus Canada was created "in defiance of geography."²⁰

The Laurentian Shield was, however, only a barrier to the "opening" of the west from the perspective of a Canadian "empire" in the west. Innis' study of the fur trade showed that the Shield did not prevent Montreal from dominating an area "which approximated the present boundaries of the Dominion,"²¹ but it also showed that not only had Montreal had to compete with New York for continental dominance, it had also had to compete with Hudson Bay. In 1821 the North West Company was defeated by the Hudson's Bay Company which had linked "the west" with Britain by means of a trade along the Saskatchewan and Nelson rivers.²²

Thus Confederation should not be seen as the result of the "maturation" of a colonial society that had spread out from the Atlantic seaboard. Confederation was a political unification of established economic units which had undergone some common experiences but which were separated by their individual histories and by different types of economic links with Britain. The units that were amalgamated by Confederation were the Maritimes, the Canadas, and the West. Each was undergoing its own form of development in relation to Britain and the economic effect of Confederation was to redefine the links of the three regions with Britain and, through the National Policy, to reorient the Maritimes and the West to Central Canada.

As far as eastern Canada is concerned the shared experiences of the colonies were largely a result of the relationship with Britain. "The success of industrialism in England evident in the advent of freedom of trade compelled the colonies to rely on their own devices, which included tariffs, railways and canals, debts, and Confederation. Tariffs became a source of the revenue needed for the construction of transportation systems and a source of protection against the competition of an increasingly efficient area under free trade."²³ Innis' studies of two major staples, cod and fur, showed the different patterns of development that characterized the Atlantic provinces and the central provinces.

The economy of the Atlantic provinces was developed in response to the requirements of a single staple—fish and, in particular, cod. The fishing industry gave rise to a pattern of expansion along the coastline which entailed numerous ports and thus economic decentralization. "The scattered character of the fishing grounds, importance of individual initiative, short seasons and dependence on a foreign market all led to a strong sense of local importance in scattered communities."²⁴

Somewhat paradoxically, Innis thought that the Maritime provinces had been integrated into the British Empire because they had been successful, but not too successful. The French hold on the western Atlantic had been precarious because "the French Empire had failed to link up the fur trade on the St. Lawrence, the fishing industry of the Maritimes, and the sugar plantations of the West Indies."²⁵ On the other hand, the first British Empire had failed to contain the "aggressive commercialism" of New England within a mercantile system that required that the colonies be primarily staple producing regions. Nova Scotia, which had ceased to be an outpost of New England because of the "requirement that for the greatest efficiency the fishery be conducted from the land nearest the fishing grounds," attempted to establish a place in the second British Empire comparable to that of New England in the first. The high price St. Lawrence region was "inadequate as a continental base to support Nova Scotia in relation to the West Indies and Newfoundland," but through a relatively successful combination of the fishery, shipping and trade, Nova Scotia was able to strengthen her autonomy within the British Empire, and even to influence the development of the continent.²⁶

The economic similarities, and thus antagonism, between Nova Scotia and New England played a part in checking the expansion of the United States: "Commercial organization based on the fishing industry contributed to the expansion and influential character of New England and Nova Scotia in the development of the continent. . . . New England and Nova Scotia reinforced and strengthened the division of North America dictated by the St. Lawrence. The separatist character of the economic life of the Maritimes has been written into the federal constitutions of the continent and has been fundamental in the position of Massachusetts and Nova Scotia."²⁷ In fact, as Innis went on to argue, it was as a result of continued competition from New England that Nova Scotia "turned toward the St. Lawrence" and ultimately Confederation.²⁸The price to the Maritimes of Confederation was "acceptance of the high price system of the St. Lawrence."²⁰ But simultaneously, Nova Scotia lost the battle with its maritime rival as labour moved southward, while capital equipment and financial control moved north from New England.³⁰

The retreat from world markets resulted in the "revolution from an economy facing the sea with a large number of ports to an economy dependent on a central port and railways to the interior. . . . The disappearance of an active commercial region as a result of the impact of machine industry has been a major calamity to the fishing regions of France, New England, Nova Scotia, and Newfoundland. . . . The transition from dependence on a maritime economy to dependence on a continental economy has been slow, painful, and disastrous."³¹ The decentralized economy of the Maritimes had been pushed into a unification with a centralized economy.

In continental Canada, centralization had its origins in the fur trade and it was Innis' study of the fur trade that led him to the far-ranging generalizations about the nature of staple development.³² The fur trade was a battle-ground in the clash of empires: "The shift from Paris to London of the fur trade was significant of the industrial growth of France and England—just as possession of Canada after the American Revolution was significant of the industrial limitations of the United States."³³ As a consequence of its position in the British Empire, Canada's energy was directed towards the exploitation of staple products. Geography—in the character of water routes, for example—and technology—available from industrial centres, especially the United States—combined with the demands of industrial centres for staple imports to develop Canada as a peripheral economy: "The result was that the Canadian economic structure had the peculiar characteristics of areas dependent on staples—especially weakness in other lines of development, dependence on highly industrialized areas for markets and for supplies of manufactured goods, and the dangers of fluctuations in the staple commodity."³⁴

The economic history of central Canada³⁵ showed clear signs of its development by means of a succession of staple industries. When fur gave way to lumber and timber, immigration was stimulated and the trade created a demand for labour and for agricultural products. This in turn led to a demand for improved transportation systems—canals and then railways. The significant point is that industrialization occurred in relation to the success of the staple export. This remained true in the second half of the nineteenth century as the transportation system, ports, towns, capital equipment, the iron and steel industry were all built up in response to the demands of the western wheat economy, and furthermore it remained true in the twentieth century as Ontario and Quebec developed their waterpower resources and their pulp and paper and mining staples. The "industrialized area is powerfully influenced by fluctuation in the basic industries as shown in wheat, pulp and paper, and mining," Innis observed in 1933.³⁶

Confederation and the wheat economy had returned to Canada dominance over an area which it had lost in 1821 when the Hudson's Bay Company assumed control of the fur trade. Despite the hiatus of fifty years, the western "empire" of the St. Lawrence was quickly re-established and "the superposition of machine industry on an institutional background characteristic of the fur trade was effected with remarkably little disturbance."³⁷ Immediate growth was facilitated by the combination of authority and independence which was the legacy of the fur trade and which was institutionalized in such "peculiar tendencies" in Canadian development as an economically active central government, branch banking and transcontinental railway systems: "The relationship which existed with the opening of western Canada, in which important officials of the Hudson's Bay Company were prominent in the activities of the Bank of Montreal, of the Canadian Pacific Railway Company, and of the Dominion government, was not accidental."³⁸

While the prairie west was passing from a fur economy, in which the southern plains were integrated with the Shield and Hudson Bay,³⁹ to a wheat economy linked to central Canada, the Pacific coast region was undergoing its own development. But once again the development was characterized by a succession of staple products. The fur trade, which had been controlled by the separate Western Department of the Hudson's Bay Company, retreated before the rapid increase of population and improved transportation which followed the series of gold rushes. Mining, smelting, and lumbering were developed as capital and labour moved to resources that were in demand in world markets. Innis observed that it was not just the wheat economy which linked the regions of the new Canada: "The development of mining provided a new industry for the Precambrian and Cordilleran regions which facilitated and hastened a restoration of the unity of Canada in the construction of a transcontinental railway."⁴⁰ Mining promoted a "highly integrated advanced type of industrial community" which "rounded out" metropolitan growth across the country. In fact, Innis suggested, the linkages produced by mining softened the effects of dependence on wheat and worked "in the main to reduce the evils of dependence on a staple economy."⁴¹

Innis' analysis of the development of each region stressed the fact that Canada had been at the "margin" of western civilization, rather than at the centre, and thus Canada's role had been to provide a succession of staple products, or raw materials, for the manufacturing industries of the centre countries. Canada has been linked to imperial centres through cod and fur exports, then through forest products, beginning with square timber and progressing to pulp and paper, as well as through agriculture and mining. The importance of the staple approach lies in its suggestion that staple exports have been more than just significant sectors of the economy. The staple industries have not been merely "leading sectors"—they have dominated the whole of Canadian society through their economic, social, and political ramifications and they have imposed upon Canada a particular pattern of settlement.

The Act of Union and responsible government were brought about by the need for capital investment on a large scale as Montreal competed with New York for the trade of the interior of the continent.⁴² The agricultural produce of Upper Canada could move to the Erie Canal as easily as to the St. Lawrence, and to some extent the emergence of a rivalry between Toronto and Montreal was a continuation of the New York-Montreal rivalry. Innis' analysis stressed the centralization inherent in the Canadian economy and thus the predominance of Montreal as the metropolis, but he recognized the emergence of Toronto, later in the century, as a "relatively independent financial centre" as a result of the efforts of Senator McMaster and the Canadian Bank of Commerce in competition with the Bank of Montreal.⁴³

The concept of a metropolis as the locus of a mature financial system has to be modified in the case of a staple economy since the Canadian metropolis, whether Montreal or Toronto, is itself located by reference to an outside "metropolis" and it is by no means clear that the local metropolis can establish a self-propelling form of economic development. Montreal owed its position to the success of a "national policy" which in Fowke's words had as its objective "the creation of a new frontier of investment opportunities for the commercial and financial interests of the St. Lawrence area."⁴⁴ Those investment opportunities were tied to staple exports and Toronto's growth may result from a similar form of dependency. Jacob Spelt has shown that Toronto was "started on the road towards metropolitan predominance not by its economic strength but by the deliberate actions of a self-interested governmental clique" and that up to the 1880s Toronto remained mainly a service centre. Spelt claims that by the late nineteenth century a "self-propelling" manufacturing industry became the major factor in the city's growth.⁴⁵ The latter claim, however, ignores the significance, clearly seen by Innis, of the development of Northern Ontario's staples and also the significance of branch plant location in the Toronto economic region. In fact it seems possible that the Canadian economy has been able to support only one metropolitan centre—a position held by Montreal as long as the National Policy survived, but taken up by Toronto as the Canadian economy was re-oriented toward the American market.⁴⁶

THE POLITICS OF STAPLE DEVELOPMENT

Staple development determined the nature of Canadian economic growth as capital and technology from "older centres" exploited Canadian resources. Not only the pace of economic growth but also the location of economic activity in Canada were to a very considerable extent made subject to the requirements of the industrial centre countries. Innis' work is thus an explicit rejection of any model of economic development which suggests that development occurs as the result of the shift of resources from a self-sufficient agriculture into trade and then into manufacturing. Innis makes not only the point that an economy may be, from the first, exploited as a capitalist venture and brought into an existing "world" economy through its export staple, but also the point that such an economy may remain linked to the "world" economy as a staple producer. Thus exogenous demands will remain a significant factor in the determination of the location of economic activity. Trading centres will be encouraged, and some "residentiary" industry may develop to supply local markets, but there is no certainty that a staple economy will progress into an industrial economy.⁴⁷The staple approach rejects any assumption of "stages" of development theory, and in so doing it also rejects the view that economic development will of necessity give rise to the proliferation of metropolitan areas within the staple-producing country. This means that regional imbalances may persist in staple-producing countries, and such imbalances may in fact be caused by the nature of staple development.⁴⁸ In saying this, however, one should guard against the suggestion that geographical and technological factors are the sole cause of such imbalances. Innis' work shows very clearly the way in which political decisions interacted with the geographical and technological: "The structure of the Canadian economy was an extension of the European or British economy, with a consequent increase in efficiency guaranteed by cheap water transport, imperial preferences, and the opening of new resources. It was handicapped by the extent of government intervention, the rigidity of government indebtedness, railway rates and tariffs, and dependence on a commodity subject to wide fluctuations in yield and price."⁴⁹ The analysis of regional imbalances is bound up with the analysis of the role of governments in a staple economy.

Transportation played a key role in the creation of a staple economy: "Cheap water transportation in the St. Lawrence economy accentuated dependence on export of staples to Europe, the specialization of technique in relation to those commodities, and support from government intervention."⁵⁰ Control from Great Britain, Innis observed, meant "a rigidity of finances without benefit of bankruptcy" and ultimately the need for tax revenue to finance the development of the transportation network required a measure of responsible government, in addition to a continued dependence on British capital. What was needed was not simply a strong government to provide assurance for the capital required to overcome the natural obstacles to water transportation by the building of canals and railways. Private capital had to be supplemented by government sponsorship to promote a strategy of economic development which would check competition from the United States.

The National Policy accompanied a political extension of the economy of the St. Lawrence: "The fixed charges involved, . . . especially in canals and the improvement of water transportation and in railways, led to a demand for new markets in the East and in the West. Expansion eastward and westward involved Confederation."⁵¹ Confederation was thus seen by Innis to be a consequence of a progressive extension of a staple producing economy. "Federation was a device to secure ample supplies of capital for the construction of railways from the Atlantic to the Pacific in a region handicapped by concentration on staples such as fur, timber, and agricultural products and without an iron and steel industry."⁵²

Innis' writings show an awareness of the fact that Confederation was a two-sided arrangement. On the one hand, a federation implied the continuation of regional powers within the new nation: "Cultural areas with their special interests of language, religion, and political and economic organization were given assurance of permanence by the federation. The position of the provinces under the British North America Act is a recognition of the differences in cultural characteristics: of Nova Scotia based on the fishing industry, of New Brunswick on the timber trade, of Quebec on the fur trade and later on agriculture and the timber trade, and of Ontario on the timber trade and agriculture."⁵³ In fact the powers of the provinces were enhanced by the "new industrialism" of hydro-electric power, mining and pulp and paper. Innis went so far as to suggest that provincial control of resources, particularly forests, had given rise to a "feudalistic structure" which contrasted with the centralization of the wheat economy: "The problem of Canadian federalism is linked to the disparity between economies stamped with the influence of the lumber industries and economies dependent on wheat, and the provincialism of the one has accentuated the federalism of the other."⁵⁴

On the other hand, there was no doubt that Confederation had established a new centre of power. A national policy which extended the staple producing economy of the St. Lawrence region and attempted to check an expansive American imperialism led Canada to develop what Innis saw as "her own type of imperialism."⁵⁵ The St. Lawrence economy took on characteristics reminiscent of dependent development elsewhere: it became a metropolitan area which controlled a vast hinterland but was itself a hinterland in a larger "international" empire.

The National Policy was characteristic of the two-sided nature of Canadian development. Innis saw the history of the second half of the nineteenth century as indicative of the decline of the old British mercantile system, or "commercial system" as Adam Smith had called it: "Into the moulds of the commercial period, set by successive heavier and cheaper commodities, and determined by geographic factors, such as the St. Lawrence River and the Precambrian formation; by cultural considerations, such as the English and French languages, by technology, such as the canoe and the raft; by business organization such as the Northwest Company and Liverpool timber firms; and by political institutions peculiar to France and England, were poured the rivers of iron and steel in the form of steamships and railways which hardened into modern capitalism."⁵⁶ The decline of the old colonial system was marked by the change to free trade which, in the middle of the century, was extended throughout North America by means of the Reciprocity Treaty, and the change was reflected in the achievement of responsible government in Canada. In this use of the terms "commercialism" and "modern capitalism" Innis clearly was referring to the displacement of an economic system based on short-term credit by a system requiring long-term credit, and in particular the growing importance of capital equipment for transportation as industrial Britain became dependent on staple areas for its supply of foodstuffs. For Canada this meant that "the commercial class, supported by the mother country in the French and British empires and with their chief interests in the fur trade and the timber trade, tended now to be displaced by the capitalist class. The earlier appeals on the part of commercial groups for continuations of the preference were replaced by the appeals of Hincks and Gait for capital support from the houses of Baring and others. The autonomous capitalist state replaced commercial capitalism."⁵⁷

Autonomy, however, was only relative: "Political control from Great Britain declined in importance, but its decline was essential to the expansion of economic control." Britain remained the "metropolitan centre of the world."⁵⁸ The "rivers of iron and steel" required new forms of economic organization but they were there to move the staples from the hinterland to the metropolis and the National Policy was not simply the Canadian version of the transition from mercantilism to industrial society.

Notwithstanding Adam Smith's view of the "commercial system" as an interference with the extension of the market which was necessary to economic development, there has been a long tradition in the analysis of economic history, going back at least to William Cunningham's The Growth of English Industry and Commerce, which sees mercantilism as a necessary step in preparation for industrialization. Charles Wilson entitles his economic history of England in the seventeenth and eighteenth centuries England's Apprenticeship. In Economic Backwardness in Historical Perspective, Alexander Gerschenkron built on this perspective by arguing that "follower" nations in the early stages of industrialization might have to substitute government economic activities for market institutions and thus in effect carry over some mercantilist elements into the stage of industrialization. Applied to Canada this model could explain features of the National Policy as a substitution for market activity made necessary by Canada's relative backwardness and, in addition, by such peculiarities of Canadian geography as the Laurentian Shield.

This line of approach, however, ignores the problem of dependency. Britain and the United States were able to move from mercantilism to an industrial society because their mercantilism was imperialist, as Christopher Hill and W. A. Williams have shown for the respective countries.⁵⁹ The opposite side of the coin is that mercantilism does not necessarily lead in such a direction for countries that have become dependent. Furthermore, in such dependent countries, the policies of the government, rather than providing substitutes for the market in order to bring about industrialization, may in fact perpetuate dependency on resource exploitation. Innis' work strongly suggests that in Canada the government has in fact played this latter role and much recent work in Canadian political economy has been devoted to the subject.⁶⁰

The National Policy resulted in industrial development in central Canada, but it did so precisely because of the success of the policy in promoting Canada's development as a staple economy. The consequences of the policy were continued dependency and regional imbalances. Central Canada established itself as a "metropolis," but it was a "second order" metropolis and if its relative dominance created discontent in the west and in the Maritimes, it was also true, as Acheson has pointed out, that many Maritime industries failed because central Canada could not absorb the output of the new regional industries.⁶¹

Innis saw the problem of regional inequalities in terms not only of the rigidities of the staple economy but also of the inequality of political power. Staple exports resulted in a fluctuating economy as a result of the varying returns as prices and yields changed in relation to rigid costs characteristic of high transportation charges and a protected system.⁶² The tariff in conjunction with the transportation network was a major feature of the National Policy, but as Innis observed it was an increasingly unreliable force: "The problem of protection is . . . that of increasing the traffic of manufactured goods and thereby increasing earnings, with the result that railroad costs may be decreased to the producers of raw materials to an amount equal to or more than the rise in the price of manufactured goods as a result of protection. Dependence on the application of mature technique, especially in transport, to virgin natural resources must steadily recede in importance as a basis for the tariff. It will become increasingly difficult to wield the tariff as the crude but effective weapon by which we have been able to obtain a share of our natural resources."⁶³ The rigidities of the Canadian economy had, however, been shared unequally: "The elasticity of the economy of Ontario has been based on a wealth of developed natural resources and has been obtained in part through inelastic developments which bear with undue weight on less favoured areas of the Dominion. The strength of Ontario may emphasize the weakness of the federation. An empire has its obligations as well as its opportunities."⁶⁴ The "development of government in the interests of capital expansion through canals and railways" produced a strong central government and by the late 1930s Innis was clearly disturbed by what he saw as excessive centralization. He worried about the disappearance of "the lack of unity which has preserved Canadian unity."⁶⁵

THE DECLINE OF THE "PRICE SYSTEM"

The difficulties created by unequal regional development were compounded by new circumstances which resulted from a combination of economic and political changes. In the short run, the problem was produced by ten years of depression. In the long run the emergence of what Innis called "national capitalism" had profound implications for Canada's political economy.

The coincidence of depression and a relative decline of natural resources, Innis observed, had had disastrous results. The analysis of the new situation was hampered by the paucity of "valid economic thinking" which Innis believed to be a consequence of the "abysmal ignorance of the economic structure in Canada."⁶⁶ Innis did believe, however, that the depression had given rise to one "outstanding contribution" to the economic literature and that was The Report of the Royal Commission on Price Spreads. The Report, heavily influenced by H. H. Stevens, mounted a stinging attack on the corporate organization of economic power. "Unregulated competition," it argued, "no longer guarantees efficiency and maximum production at fair prices. Competition degenerates sometimes into economic warfare where victory may go to the strong, rather than to the efficient."⁶⁷ Innis felt that the Commission had touched on a vulnerable spot in Canadian politics: "The low cultural level of Canadian business, conspicuous in speeches, architecture, the standard of living, and in an inconceivable narrowness of outlook, together with the relative inability of the large corporate organization characteristic of transcontinental development, to meet problems of adjustment during periods of depression—these have not been things pleasant to contemplate."⁶⁸ Despite his admiration for R. B. Bennett, Innis saw that the tradition of "evangelical bourgeois meliorism" was inadequate to the times.

The Price Spreads Report had noted that the social inequities which had resulted from corporate concentration also had a regional aspect: "Agricultural exporters, open to all the strains and stresses of world conditions, are defenceless in the face of a drastic decline in prices, but the more powerful domestic manufactures and traders have in many cases been able to offer an effective resistance to that decline."⁶⁹ The regional impact of the depression had given rise to a second major document. But Innis was not nearly so favourably impressed by The Report of the Royal Commission on Dominion-Provincial Relations. The Rowell-Sirois Commission recommended a national minimum standard of social services as well as the use of the fiscal and monetary powers of the central government to enhance growth and counter the downward effects of the business cycle. The consequence was nothing less than the redefinition of the National Policy. A succession of Liberal governments introduced a wide range of social welfare policies which were to be administered uniformly across the country by a combination of federal and provincial government bureaucracies.

The Commission had originated in a concern with the inadequacy of government finances and Innis shared the concern. He saw the federal government as "a credit instrument" and thus "the problem of debt is the problem of Canadian federalism."⁷⁰ But by the mid-1930s Innis was concerned with the "break-up of Confederation" as a result of rigidities made evident by the depression⁷¹ and he did not think that the Rowell-Sirois Commission had been sufficiently concerned with the conflict between the federal and provincial governments which was inherent in the Canadian political economy. The old National Policy reflected a disequilibrium between eastern and western Canada and "accentuated it through land, tariff and railway policies and bonuses indirectly and directly to the steel and coal industries of Nova Scotia." But the Commission did not direct itself to the problems of economic growth, transportation costs, tariffs and the staple economy. Later Innis would add the criticism that the new "national policy" of emphasis on central monetary and fiscal policy was destroying the basis of federalism.⁷²

Federal-provincial relations were being changed by major upheavals in the price system. Innis perceived the price system as the creator of an international economy. The price system, he observed in his 1938 article, "The Penetrative Powers of the Price System," "had eaten out the rotting timbers of European colonial structures" and "as it had destroyed the feudalism so it destroyed the defences of commercialism." In the long process of the decline of commercialism, or mercantilism, "Great Britain emerged as a dominant metropolitan unit."⁷³ Canada has developed on the margin of this metropolis. In this analysis of the price system, however, Innis clearly was identifying the price system as a market-price system.⁷⁴ But, as Innis himself saw, capitalism could "run in the direction of commercialism" or even, as in Canada, towards the "highly centralized state" where the "state became capital equipment."⁷⁵ These developments could modify the prevailing price system.

Mercantilist policies and the creation of a highly centralized state can be seen as attempts to change existing centre-margin relations by the creation of a new metropolitan unit. Inevitably, however, the attempt to create a new Canadian centre further peripheralized the "regions" of the Canadian economy, and in a federal polity raised the question of which state should decide on the modifications.

The situation was complicated by the fact that the central provinces were also involved in the success of the new "provincial" staples but, as Chester Martin noted, the acquisition of the Hudson's Bay land had transformed Canada from a "Confederation of equal provinces into a miniature Empire, with a vast domain of subordinate colonial territory under its control."⁷⁶ The powers of the federal government were designed, as J. R. Mallory has shown, for "rapid capital accumulation" and for the development of the West as "Canada's empire." Federal disallowance power has been "an imperial device for holding other provinces under the sway of the predominant economic interest of the central provinces."⁷⁷ Thus while the commercial and financial interests of central Canada remained committed to the success of the staple industries in Ontario and Quebec and thus to a continuing dependency of the Canadian economy, they exercised their dominance over the western hinterland and increasingly over the Maritime region as the National Policy created a pattern of unequal levels of development.⁷⁸

The rigidities of central policy and the opportunities afforded by new staples ultimately pushed the provinces into their own "neo-mercantilism." Just as nations had reacted to the old international price system by neo-mercantilist policies which were in effect attempts to create new price systems with new metropolitan centres, so did provincial governments attempt to promote their own metropolitan centres by means of neo-mercantilist policies. Economically the provinces were aided in the conflict with the old, centrally dominated east-west price system by the interests of the American economy. Politically, however, the provinces were hindered through the limitation of their powers with regard to tariffs and monetary policy.

Ultimately, the attempt to establish new metropolitan centres has been defeated by more powerful price systems. For that reason federal-provincial conflicts have the character of wars between ghosts. The centre, object of so much provincial resentment, is itself a spectral presence. The status of Montreal as Canada's metropolis vanished with the National Policy. Toronto was the immediate beneficiary of the influx of American branch plants but, as we can see now, Toronto is, like Montreal before it, merely a second order metropolis. As Garth Stevenson has remarked: "The health of the Ontario economy depends less on decisions made in Ottawa about freight rates and tariffs than on decisions made in Washington about defence contracts and the automotive industry. . . . From being the metropolitan region of Canada and the principal beneficiary of Confederation, Ontario has moved towards the position of being in effect, a province like any other."⁷⁹

As Donald Smiley has noted, Innis did not think that the Rowell-Sirois Commission had dealt with the "disequilibrium" produced by the National Policy.⁸⁰ But not only had the Report failed to do justice to the analysis of regional inequalities, it had paid insufficient attention to economic developments in the United States and Great Britain in recent years. Innis' analysis suggested that inequalities between groups and regions in Canada were exacerbated by the "conflict between a price structure dominated by Great Britain and a price structure increasingly dominated by the continent."⁸¹

As a result of long-run changes, the conflict between regionalism and centralization was being given a new dimension as the "second unity" of Canada began to "drift in the direction of the first." Added to the effect of depression was the fact that the Canadian federal structure was being "wrenched between the influence of British policies and their effect on wheat, and of American policies and their effect on minerals and newsprint and on the rigidity of such important costs of wheat production as railway rates and interest charges.⁸² Innis' analysis of the federal-provincial conflicts of the 1930s derives from his perception that "international industrialism" was giving way to "national industrialism."

Canadian politicians had two standard responses to depression: tariffs and public works. In the past these policies had been successful because each wave of capital imports had tapped fresh natural resources and the capital expenditures had reduced transportation costs. Each round of expansion had left a legacy of heavy fixed charges and government debt which could only be financed while natural resource markets remained buoyant, but a powerful central government, the legacy of New France, had "enabled Canadians through governmental activity to develop their natural resources by construction of canals, railways, hydro-electric power facilities and other undertakings."⁸³ Expansion within the framework of the National Policy had also assumed the orientation of the Canadian economy towards the St. Lawrence and thus to Great Britain in opposition to the pressures for a continental integration with the United States: "Periods of depression accompanied by migration to the United States have been accompanied by a hardening of the central structure and appeal to imperialist sentiment, and this in turn has increased the importance of governmental intervention during periods of prosperity. Government ownership in Canada is based on a hard core of defence against the United States."⁸⁴

Innis did not, however, think that Canada could escape from the depression of the 1930s by means of the habitual remedies. Other countries were experiencing serious difficulties of readjustment, but Canada's depression was peculiarly the result of the rigidities imposed by staple development with large overhead costs and no simple importation of fiscal or monetary prescriptions would cure the malady. New trade weapons had taken the place of war. Exchange controls, quotas, empire agreements, economic autarchy—all imposed a particular burden on a Canadian economy dependent on staple exports: "Canada with inadequate, badly coordinated, machinery stands on the one hand in danger of being burned at the stake of natural resources and on the other hand in danger of being boiled in the oil of unrestricted competition."⁸⁵ The low price of raw materials required market controls and also relief measures to ease the suffering of regions which were particularly hard hit by the closing of foreign markets.

Canada had emerged from the "intense baptism of fire of the 1914-18 war" with a determination to control its own destiny, but the problem, as Innis saw it, was that the National Policy had operated in the context of an international economy which by the 1930s no longer existed. The entire Canadian economy was concerned with the demands of an international market and each region of Canada had its "conditions of equilibrium" with regard to powerful external economies such as Britain and the United States. The shocks of the 1930s were profound and in Innis' view they had "exposed the limitations of finance capitalism." From the late 1930s until the end of his life Innis grappled with the analysis of an international economy which was characterized by the "spread of national capitalism" and thus the declining efficacy of a price system which had unified the international economy. The new national capitalism was also marked by a change, particularly fateful for Canada, as the United States displaced Britain in the international hierarchy of power.⁸⁶

Innis found that the analysis of the decline of the price system and the rise of national capitalism was hampered by the limitations of economic thought. Economic thought itself had been bound up with the framework of the price system. It was even possible to note a "bias" of economics "which makes the best economists come from powerful countries." What was needed was a "sociology or a philosophy of the social sciences and particularly of economics" which would make clear the limitations of scientific thought and Innis embarked upon an intellectual voyage that eventually led him a long way from orthodox economic theory. It was not an easy undertaking for Innis because, while he increasingly feared the "outbreak of irrationality which is the tragedy of our time" and perhaps looked back with some fondness to a phase of capitalism when commerce had acted as a "stabilizer of power," his own analysis suggested that the new world of national capitalism was in fact a result of the very success of the price system which brought the formation of monopolies and ultimately the weakening of even the profit motive by its "emphasis on management." Innis was in the uncomfortable position of a nineteenth-century liberal who was perspicacious enough to recognize that the foundations of his belief were being undermined by historical developments.⁸⁷ The results of Innis' search for a philosophy of social science were fragmentary, but Innis continued to produce penetrating insights into the workings of the Canadian economy.

World War I had marked the final end of the free-trade capitalism of the nineteenth century. The old capitalism had been replaced by a system which Innis called variously "the new industrialism," "neotechnic industrialism," or "national capitalism." Industrialism had moved beyond the "metropolitan" area of the Atlantic basin with its coal and iron and year-round water transportation to new centres which relied on hydro-electric power and oil. Accompanying this change was a nationalism which Innis identified with "neo-mercantilist economics." Competition for markets for manufactured goods was leading to protective tariffs and other forms of regulation. More countries were discovering the advantages of "national self-sufficiency" to the extent of protecting their home markets while continuing to invade foreign markets. The result was a situation not very favourable to "specialization."⁸⁸ Yet the old system, "palaeotechnic industrialism," had developed Canada as a large-scale producer of basic commodities.

In fact the old "international" economy had not worked to the equal advantage of all. The central role of the London money market enabled Britain to solve payments imbalances by making bank rate changes rather than price adjustments, thus shifting the burden to capital receiving, and commodity exporting, countries.⁸⁹ The National Policy had managed to integrate Canada into this system with some success, but the rise of the "neotechnic industrialism" meant a concern with base metals, hydroelectric power, and pulp and newsprint rather than wheat, and it was accompanied by the re-orientation of the Canadian economy towards the capital markets of the United States and this required a new policy.

Kari Levitt has argued that the primary feature of the "new mercantilism" is the multinational corporation: "The subsidiaries and branch plants of large American-based multinational corporations have replaced the operations of the earlier European-based mercantile venture companies in extracting the staple and organizing the supply of manufactured goods."⁹⁰ As Abraham Rotstein has suggested, it is possible to see a further similarity between multinational corporations and the old mercantilist empires in that multinationals, as much as possible, operate a trading system in which prices are administered rather than accepting the international market price system which Innis believed had been characteristic of nineteenth-century capitalism.⁹¹

Innis, curiously, did not pay much attention to the multinational corporation as a new form of economic organization. He did, of course, observe the increasing "penetration of American capital and control in the basic industries during the speculative boom of the twenties . . . followed by further migration to Canada of branch plants during the depression under the shelter of the high tariff of 1930 and the extension of imperial markets," and he noted the paradox that Canadian nationalism and even imperialist sentiment had worked to the advantage of American branch plants. In a similar way even the rejection of reciprocity in 1911 had favoured the United States. Thus, Innis concluded, the result of the far-reaching, cumulative influence of the United States was to "twist" both Canadian financial structures and the Canadian federal structure which were oriented to a western expansion of the St. Lawrence economy. The consequences were profound for Canadian nationalism and regionalism.⁹²

Canada had moved "from colony to nation to colony." This perception of Canada's situation produced an ambivalence in Innis' attitude to nationalism. Nationalism in the sense of neo-mercantilism and the "monetary nationalism" of Keynesian policies had destroyed the international economy in which Canada had developed as a nation and trade barriers and monopolies were "deadly enemies" of "free-enterprise" capitalism. Yet given that this international system had been destroyed, it was necessary for Canada to protect itself: "The stupidity of nationalism is tempered by the chaos of internationalism." Canada's difficulties were enhanced by neo-mercantilism in the United States and, as "American imperialism . . . replaced and exploited British imperialism," Canada's very national existence was called into question. "We are indeed fighting for our lives," Innis concluded, and "the pride taken in improving our status in the British Commonwealth of Nations has made it difficult for us to realize that our status on the North American continent is on the verge of disappearing. Continentalism assisted in the achievement of autonomy and has consequently become more dangerous. We can only survive by taking persistent action at strategic points against American imperialism in all its attractive guises."⁹³

The complexities of nationalism were increased by the divisiveness of regionalism which was promoted as a result of the decline of the St. Lawrence as the centre of the Dominion. The activities of the provinces assumed a new importance with the American demand for resources which were controlled by provincial governments. "The pull to the north and south," as Innis put it, "has tended to become stronger in contrast with the pull east and west." The pulp and paper and mining industries were indicative of a new economic system which contrasted with the economy that underlay the British North America Act. The influence of the United States, combined with the centralizing tendencies of the Liberal governments under Mackenzie King were sharpening the differences between federal and provincial governments.⁹⁴

The price system of the nineteenth century, controlled effectively from London, had brought railways and industrial capitalism to Canada. The second half of the nineteenth century had, nonetheless, been one long period of depression and, ironically, prosperity came to Canada in the early years of the twentieth century as the National Policy was being undermined by new sources of power and the emergence of new centres of capital accumulation. In fact, as Innis knew, the international price system had had mixed results in staple producing areas of the world and Confederation and the National Policy were merely a mercantilist modification of the price system which shifted some power to a second-order metropolis. But if Canada needed protection from the full working of the nineteenth-century economy with its international division of labour, the blasts of the twentieth century were even more chilling. In a world of "national capitalism" and American empire the old international order offered an attractive ideal. Yet, as Innis saw, the situation had changed and it was not possible to avoid the conclusion that "nationalism provides the only sure basis for internationalism."⁹⁵

Innis' contribution to our understanding was the consequence of the tragic vision of nineteenth-century Canadian liberalism faced with the disappearance of the conditions which gave it its meaning. The causes of Canada's deformation did not reside merely in the replacement of Imperial politics by continentalist politics as Creighton has argued. The causes were embedded in the political economy of staple development. It was a short step from Innis' despair to George Grant's Lament for a Nation.

NOTES

¹ H. A. Innis, Essays in Canadian Economic History, ed. Mary Q. Innis (Toronto: University of Toronto Press, 1954), p. 368.

² Innis, The Fur Trade in Canada, An Introduction to Canadian Economic History (Toronto: University of Toronto Press, 1962), p. 392.

³ William Westfall has recently remarked that Careless' "metropolitanism," which is an offshoot of Creighton's "Laurentianism," also focuses on the "centre" rather than the "edge." See W. Westfall, "The Ambivalent Verdict: Harold Innis and Canadian History," in William H. Melody, Liora Salter and Paul Heyer, eds., Culture, Communication and Dependency (New Jersey, 1981), p. 37.

⁴ See my Dominance and Dependency: Liberalism and National Policies in the North Atlantic Triangle (Toronto, 1978), Chapter 1.

⁵ Gerard S. Vano, Neo-Feudalism: The Canadian Dilemma (Toronto, 1981), pp. 126, 128.

⁶Ibid., pp. 137 and 27. This is not a problem for Innis' analysis, though, as I have suggested (in Dominance and Dependency, ch. 1), Innis' work does need to be extended into an enquiry into the social relationships produced in a staple economy. Vano's problem, however, begins with his ideological definition of liberalism as "universal" and "progressive."

⁷ See W. J. Eccles, "A Belated Review of Harold Adams Innis, The Fur Trade in Canada," Canadian Historical Review LX (1979), pp. 419-41; Hugh M. Grant, "One Step Forward, Two Steps Back: Innis, Eccles and the Canadian Fur Trade," Canadian Historical Review LXII (1981), pp. 304-22; Eccles, "A Response to Hugh M. Grant on Innis," Canadian Historical Review LXII (1981), pp. 323-29.

Eccles questions the reputation of The Fur Trade in Canada on what I see as seven points: 1) Innis wrongly asserted that "the economy and institutions of France were thrown into disarray by the Canadian fur trade"; 2) Innis "failed completely to grasp" the political factor (and the religious factor) in the policies of New France and missed the military factor in its defeat; 3) the Hudson Bay route was superior to the Montreal route only after the introduction of the York boat in the nineteenth century, and prior to that there is no evidence for British superiority in the fur trade; 4) centralization in New France was not simply a consequence of the fur trade but was typical of French administration everywhere; 5) the fur trade was not itself a problem in limiting the economic development of New France; 6) Innis failed to produce a coherent account of the triumph of the monopolistic Hudson's Bay Company over the North West Company; 7) the "extreme" economic determinisi view that "Canada emerged with a political entity with boundaries largely determined by the fur trade" is an example of Innis' "a priori premises and conclusions."

Eccles does, I think, sustain the claim that Innis overemphasized the significance of the fur trade in the North American theatre of the clash between Britain and France. As he says in his riposte to Grant: "In my view one of the main weaknesses of Innis' work on the fur trade was his failure to elucidate the real purpose of French western policy" (p. 327).

It is also true that Innis did push his conclusions to extremities, and Grant's reply does not do much to refute Eccles' specific points. Yet in the end Eccles' article does not really confront the main issues of the staple approach that Innis delineated. His criticism on this issue is peripheral.

⁸ Donald Creighton, "Harold Adams Innis—An Appraisal," in W. Melody et al, eds., Culture, Communication and Dependency, p. 20.

⁹ Westfall, "Ambivalent Verdict," p. 48.

¹⁰Fur Trade, p. 393.

¹¹ For an analysis of core economies which pays tribute to Harold Innis, see Robert Gilpin, U.S. Power and the Multinational Corporation (New York, 1975), Chapter II.

¹² This is not the place to discuss the appropriateness of this term. Suffice it to say that in general it was applied to countries of European settlement in which the precolonial population had evolved a hunting and pastoral economy rather than a peasant agriculture.

¹³Essays, p. 10.

¹⁴Ibid., p. 11.

¹⁵Ibid.

¹⁶Fur Trade, p. 401.

¹⁷Essays, p. 208.

¹⁸ See W. A. Mackintosh, "Economic Factors in Canadian History," reprinted in W. T. Easterbrook and M. H. Watkins, eds., Approaches to Canadian Economic History (Toronto, 1967). On the influence as well of C. R. Fay on the "staple approach," see R. Neill, A New Theory of Value: The Canadian Economics of H. A. Innis (Toronto, 1972), p. 39.

¹⁹ Mackintosh, "Economic Factors," p. 4.

²⁰Ibid., p. 15.

²¹Essays, p. 156.

²² The technological factors contributing to this development are discussed by Innis in terms of the competition between canoes and York boats (see Essays, p. 65). Innis also pointed out that "dependence on the York boat rather than the canoe was symbolic of the increasing importance of capitalism" (Fur Trade, p. 387). The political implications were that accessibility to the continent through the St. Lawrence and Hudson Bay reinforced British control. The interior of the United States was less accessible.

²³ Innis, The Cod Fisheries: The History of an International Economy (Toronto: University of Toronto Press, 1954), p. 505.

²⁴Essays, pp. 38-39. See also the Conclusion to Cod Fisheries where Innis suggests that this coastal decentralization offset the centralization of the commercial group in Halifax. I have not included Innis' specific comments on Newfoundland in this paper, but The Cod Fisheries and several essays contain an analysis of the economic factors peculiar to the history of that province. As will be apparent, this discussion of the "Maritimes" is primarily related to Nova Scotia.

²⁵Cod Fisheries, p. 504.

²⁶ See Essays, pp. 204, 365, 367. Innis observed that control from the Atlantic was based largely on the relative success of the integration of the trade and industry of the European empires. The second British Empire was "more flexible" than the first and was more efficient at "coordinating the interests of staple-producing regions" which depended on Britain for a market and for capital. Cod from Newfoundland, beaver from Canada, sugar from the West Indies, all "depended on commercial and industrial England." See Essays, pp. 100, 106.

²⁷Cod Fisheries, p. 499. See also Essays, p. 234: "Separatist Nova Scotia and New England accentuated differences between the northern and southern parts of the continent."

²⁸Cod Fisheries, p. 504.

²⁹Essays, p. 367.

³⁰Cod Fisheries, p. 492.

³¹Ibid., pp. 507-8. Innis (p. 485) referred to the "disastrous results" of recent industrialism (mining, pulp and paper), although his pessimism about Nova Scotia could be said to be modified by his analysis of Newfoundland: "An industry which flourished with commercialism and an international economy was crushed by the demands of capitalism and nationalism. The impact was less striking in Nova Scotia because of her more divergent resources and also because of influences inherent in Confederation" (p. 497).

³² See Essays, pp. 28, 39.

³³Fur Trade, p. 386. Innis adds that "the northern half of North America remained British because of the importance of fur as a staple product" (p. 391).

³⁴Essays, p. 66.

³⁵ With the exception of a few comments, Innis did not distinguish between Quebec and Ontario in his analysis of the economy of the St. Lawrence. He noted that the displacement of the government and trading organizations of New France had left the Church as "the shield and sword of a race and language exposed to foreign domination" (Essays, p. 177). Innis also suggested that Quebec was less vulnerable to American influence in that a combination of "French tradition and more direct accessibility to European markets provided a less suitable environment for American technique" (Essays, p. 166). See also his comment that "Imperialism which is not imperialistic has been particularly effective in Canada with its difficulty in dealing precisely and directly with foreign problems because of a division between French and English" (Essays, p. 407).

³⁶Essays, p. 95.

³⁷Fur Trade, pp. 397-98.

³⁸Ibid., p. 397. See also Essays, p. 15.

³⁹ See W. L. Morton, Manitoba: A History (Toronto, 1957), for a discussion of the complex society which occupied what Pratt saw as the "blank spaces" of Macdonald's map.

⁴⁰ Innis, Settlement and the Mining Frontier, Canadian Frontiers of Settlement, vol. IX (Toronto, 1936), p. 397.

⁴¹Ibid., p. 403.

⁴² See Essays, p. 117, Innis suggested that the struggle between New York and Montreal was a continuation of the Iroquois-Huron conflict (p. 110).

⁴³Essays, p. 118. See also Innis, "The Rise and Decline of Toronto," Canadian Forum, XIII (1933), p. 251. Innis thought that transportation and finance continued to favour Montreal in the 1930s. D. C. Masters' The Rise of Toronto (Toronto, 1947), is based on N. S. B. Gras' concept of a metropolis as the centre of a mature financial system.

⁴⁴ V. C. Fowke, "The National Policy—Old and New," reprinted in Easterbrook and Watkins, Approaches, p. 243.

⁴⁵ J. Spelt, The Urban Development in South-Central Ontario (Toronto, 1972), pp. 49, 137, 224.

⁴⁶ On branch plant location see William Alonso, Industrial Location and Regional Policy in Economic Development, Centre for Planning and Development Research, University of California, Berkeley, Working Paper no. 74. W. T. Easterbrook ("Long Period Comparative Study: Some Historical Cases," Journal of Economic History, 17 [1957], pp. 571-95), makes the point that Canada differed from the U.S. where a number of expansion points emerged with inter-urban rivalries for control of hinterlands.

⁴⁷ See Essays, pp. 289-90. A stages of growth theory is outlined by D. C. North, "Location Theory and Regional Economic Growth," Journal of Political Economy, 63 (1955), pp. 243-58. North modifies the "traditional" development and location theory but he still concludes that "regionalism will tend to disappear" (p. 256) as accumulated capital overflows into other activities. On the subject of "linkages" between staples and other industries, see M. H. Watkins, "A Staple Theory of Economic Growth," reprinted in Easterbrook and Watkins, Approaches, pp. 49-73.

⁴⁸ See, for example, W. Alonso, "Urban and Regional Imbalances in Economic Development," Economic Development and Cultural Change, 17 (1968), pp. 1-14.

⁴⁹Essays, p. 234. See also Innis' comment that geography has been effective in "determining the grooves of economic life through its effects on transportation and communication" (Essays, p. 88).

⁵⁰Ibid., p. 228. Paradoxically, according to Innis, control from Great Britain was strengthened by the import of American technique: "The acceleration of development in Canada through contributions from the United States accentuated dependence on British capital and the increase of public debt" (p. 230).

⁵¹Ibid., p. 71. See also p. 76.

⁵²Ibid., p. 313.

⁵³Ibid., p. 207. See also p. 251.

⁵⁴Ibid., p. 368. See also Innis, Political Economy in the Modern State (Toronto, 1946): "In Canada feudalism continued in the ownership of natural resources by the provinces and produced the dual mixture of a capitalistic federal government and feudalistic provincial governments" (p. 88).

⁵⁵ Innis, Changing Concepts of Time (Toronto, 1952), p. 69.

⁵⁶Essays, p. 258.

⁵⁷Ibid., p. 206.

⁵⁸Ibid., pp. 353-56.

⁵⁹ See C. Hill, Reformation to Industrial Revolution (Harmondsworth, 1969) and W. A. Williams, The Contours of American History (Chicago, 1966).

⁶⁰ See Mel Watkins, "The Staple Theory Revisited," Journal of Canadian Studies 12:5 (Winter 1977), pp. 83-95.

⁶¹ T. W. Acheson, "The Maritimes and 'Empire Canada,'" in D.J. Bercuson, ed., Canada and the Burden of Unity (Toronto, 1977), p. 95.

⁶²Essays, p. 288.

⁶³Ibid., p. 77.

⁶⁴Ibid., p. 122.

⁶⁵Political Economy in the Modern State; the quotations are from pp. 132-33.

⁶⁶ Innis, "For the People," University of Toronto Quarterly, 5 (1935-36), p. 284.

⁶⁷Report of the Royal Commission on Price Spreads (Ottawa, 1937), p. 12. The Report added (p. 13) that the corporate form "facilitates the evasion of moral responsibility for inequitable and uneconomic practices." It is instructive to compare this document with the recent report of the Royal Commission on Corporate Concentration.

⁶⁸ Innis, "For the People," p. 286. Innis noted elsewhere that "Adam Smith might have said of capitalists as he said of merchants: 'The government of an exclusive company of merchants is perhaps the worst of all governments for any country whatever'" (Essays, p. 163).

⁶⁹Report of the Royal Commission on Price Spreads, p. 11.

⁷⁰Essays, p. 265.

⁷¹Ibid., p. 267.

⁷² Innis, "The Rowell-Sirois Report," Canadian Journal of Economics and Political Science, 6 (1940), p. 570; Changing Concepts of Time, p. 74. Innis recognized the problem of the Commission in facing "the Charybdis of increasing provincial powers and the Scylla of railway amalgamation masquerading as national unity" (Essays, p. 210).

⁷³Essays, p. 257.

⁷⁴ On market and non-market price systems, see Abraham Rotstein, "Innis: The Alchemy of Fur and Wheat," Journal of Canadian Studies, 12:5 (Winter 1977).

⁷⁵Essays, p. 260.

⁷⁶ Quoted in Carl Berger, The Writing of Canadian History (Toronto, 1976), p. 38.

⁷⁷ J. R. Mallory, Social Credit and the Federal Power in Canada (Toronto, 1976), pp. 6, 169, 177. Mallory makes the point that "at least as far as disallowance is concerned, provincial legislation on the subject of property and civil rights has very definite limits . . . although the Padlock Act failed signally to arouse the Department of Justice to the pitch of indignation it might have reached if the property padlocked had been a branch of a chartered bank" (pp. 176-77).

⁷⁸ See T. W. Acheson, "The National Policy and the Industrialization of the Maritimes, 1880-1910," Acadiensis 1 (1972), pp. 3-28; Acheson, "The Maritimes and 'Empire Canada,'" pp. 87-114; and, also in the Bercuson volume, Ernest R. Forbes, "Misguided Symmetry: The Destruction of Regional Transportation Policy for the Maritimes" and T. D. Regehr, "Western Canada and the Burden of National Transportation Policies."

⁷⁹ Garth Stevenson, "Continental Integration and Canadian Unity," in W. A. Axline et al, Continental Community? Independence and Integration in North America (Toronto, 1974), p. 209.

⁸⁰ Donald V. Smiley, "Canada and the Quest for a National Policy," Canadian Journal of Political Science, vol. 8 (1975), pp. 46-47. Creighton ("Harold Adams Innis—An Appraisal," p. 22) refers to Innis' "anti-federalist perspective."

⁸¹Essays, p. 198.

⁸²Ibid., pp. 74, 279. See also pp. 368-69.

⁸³Ibid., p. 384. See also pp. 80-81.

⁸⁴Ibid., p. 195.

⁸⁵Ibid., pp. 130, 140. See also p. 155.

⁸⁶Ibid., pp. 291, 371. Innis noted that "commercial capitalism" had given way to the free trade of "finance capitalism" as a result of the conflicts produced by mercantilism. The American War of Independence had been one of the conflicts but "it was precisely the contributions of the United States to the solution of the problems of commercial capitalism which made it impossible for her to solve the problems of finance capitalism." Innis here uses the term "finance capitalism" to refer to what he had earlier called "modern capitalism," i.e., a system requiring long-term credit as opposed to the short-term credit of commercial capitalism.

⁸⁷Changing Concepts of Time, p. 104 and also pp. 105-07; Essays, pp. 83, 97-100, 269. See Essays, pp. 123-140, for examples of Innis' despair at the collapse of the old order: "Democracy, nationalism and regionalism are involved in vicious circles which imply lowering of the standard of living . . ." (p. 131).

⁸⁸ See "The Canadian Economy and the Depression," Essays, pp. 123-35. (This essay incorporates an earlier one entitled "Economic Nationalism.") See also Essays, pp. 252-72, and "Preface" to Political Economy in the Modern State.

⁸⁹ See, for example, Joan Robinson, The New Mercantilism (Cambridge, 1966), pp. 5-6.

⁹⁰ K. Levitt, Silent Surrender (Toronto, 1970), p. 23.

⁹¹ Rotstein, "The Alchemy of Fur and Wheat." Innis did note, however, that "the rapidity of development accentuated by the position of overhead costs incidental to fixed capital equipment such as transcontinental railways weakens the effect of price as an organizing factor" (Settlement and the Mining Frontier, p. 404). On the significance of multinational corporations, see my Dominance and Dependency, pp. 56-63 and 136-43.

⁹²Essays, pp. 156-75. See also p. 174, and "Preface" to Political Economy in the Modern State.

⁹³Essays, pp. 405, 395, 410, 271; Changing Concepts of Time, pp. 19-20. Innis noted that sentiment towards Great Britain had been "at the heart of our cultural life in Canada" but that by the 1940s a transition to the U.S. empire was linked with opposition to "socialistic trends" in Britain (Essays, p. 405).

⁹⁴Essays, p. 209; Changing Concepts of Time, p. 74.

⁹⁵Essays, p. 83.