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Published online by Cambridge University Press: 07 November 2014
This Article is an attempt to reopen the question of the role of government in the economic life of Upper Canada before 1840. It stems from certain problems encountered in connection with a history of the Welland Canal Company, and material relating to the Welland Canal and to the career of William Hamilton Merritt, its promoter, will be used to illustrate the argument. The central problem to which we shall address ourselves is, quite simply: what difference did the political and social state of Upper Canada in this period make to the way in which the Welland Canal Company was founded and managed?
The general outlines of Upper Canada's political organization and social structure will already be familiar to most readers. Other historians have dealt more than adequately with such matters as the origin of the dominant élite which we know as the Family Compact, the slow development of the idea of responsible or parliamentary government, and the aims, grievances, and methods of the colonial reformers. It is to be regretted that our knowledge of Upper Canada's economic development in this period is less detailed, but the main features are clear enough for present purposes.
The few attempts that have been made to analyse the interaction of economic, political, and social factors in the history of Upper Canada, particularly in connection with the rebellion of 1837, suggest the fruitfulness of such an approach. The present essay is to be taken as a case-study in this type of analysis.
An earlier version of this paper was read on the author's behalf by Mr. John H. Dales at the annual meeting of the Canadian Political Science Association in Montreal, June 6, 1951. The author wishes to express his gratitude to Mr. Dales, and also to Professor R. L. Jones, whose comments on this revised version have proved very helpful.
1 See especially Creighton, D. G., The Commercial Empire of the St. Lawrence, 1760–1850 (Toronto, 1937), and “The Economic Background of the Rebellions of Eighteen Thirty-Seven,” Canadian Journal of Economics and Political Science, III, no. 3, Aug., 1937, 322-34; and also F. Landon, “The Common Man in the Era of the Rebellion in Upper Canada,” Canadian Historical Association, Report (Toronto, 1937), 79–91.Google Scholar
2 Cf. Creighton, , “The Economic Background of the Rebellions,” 323–4.Google Scholar
3 Public Archives of Canada, pamphlet no. 2412, Papers Respecting Claims of Shareholders in the Late Welland Canal Company for Arrears of Interest (statement by Merritt, W. H.); P.A.C., Merritt Papers, vol. 27 (list of subscribers to the Welland Canal, 1829), vol. 28 (Merritt's memorandum book, 1837–43), and vol. 29 (Welland Canal ledger).Google Scholar
4 P.A.C, Merritt Papers, vol. 5, Robinson, J. B. to Merritt, W. H., 06 6, 1850.Google Scholar
5 Journals of the House of Assembly of Upper Canada, 1836–7, Appendix, vol. II, Third Report of the Select Committee Appointed to Examine and Enquire into the Management the Welland Canal, evidence of Mackenzie, W. L..Google Scholar
6 Upper Canada, Commissioners of Internal Navigation (1823), First'Report. This may be consulted in Toronto Reference Library. For the second and third reports, see P.A.C., Series Q, no. 335–2, pp. 287–309.
7 Ontario Archives, Merritt Papers, vol. 12, Merritt, W. H. to Prendergast, Jedediah, 01 11, 1824.Google Scholar
8 For the geographical distribution of share holdings, see Journals of the House of Assembly of Upper Canada, 1836–1837, Appendix 3, Report of Committee on Welland Canal; for the names of the stockholders, see P.A.C., Merritt Papers, vol. 29.Google Scholar
9 P.A.C., Series Q, no. 336–2, pp. 506–7, Maitland to Bathurst, Nov. 8, 1824.
10 See Creighton, Ogden, A General View of the Welland Canal in the Province of Upper Canada: Together with a Brief Examination of Its Advantages … (London, 1830). Yates visited England during 1830 in an attempt to sell Welland Canal shares. Both Creighton, and McDonell, later served on the board of the Company.Google Scholar
11 There were two reasons for this. In the first place, the Bank of Upper Canada was, in mercantilist terminology, a “money” bank, not a “land” bank. Its business was banking on mercantile credit, not banking on real and personal estates. For the distinction, see Steuart, Sir James, Inquiry into the Principles of Political Economy (London, 1765), Book III; for the influence of mercantilist theory on the development of banking in America, see Fritz Redlich, The Molding of American Banking: Men and Ideas (New York, 1947), part I, 1–10. In the second place, Merritt had mortgaged the entire property and profits of the Company to the British Government in 1828 as security for a loan of £50,000; see Journals of the House of Assembly of Upper Canada, 1830, Appendix, Report of Select Committee on Welland and Burlington Canals.Google Scholar
12 P.A.C, Merritt Papers, vol. 2, Allan, William to Merritt, W. H., 04 29, 1830.Google Scholar
13 Ibid., J. B. Yates to W. H. Merritt, Jan. 18, 1830.
14 Welland Canal Company, Report (1826).
15 See Journals of the House of Assembly of Upper Canada, 1836, Appendix, p. 27, Boulton, to Rowan, , 03 28, 1833; McDonell to Rowan, March 23, 1833; Merritt to Rowan, May 9, 1833; Merritt to Dunn, May 9, 1833.Google Scholar
16 Robinson, J. B. to Merritt, W. H., Dec. 13, 1833, printed in the St. Catharines Journal, 02 25, 1836.Google Scholar
17 See Merritt, W. H., Brief Review of the Origin, Progress, Present State, and Future Prospects of the Welland Canal (St. Catharines, 1852), 23.Google Scholar
18 For this curious incident, see the minutes of the board for Sept. 24, 1829, printed in Journals of the House of Assembly of Upper Canada, 1836–7, Appendix, vol. II; together with Merritt, J. P., Biography of the Hon. William Hamilton Merritt, M.P. (St. Catharines, 1875), 121.Google Scholar
19 British Colonial Argus, 08 20, 1833.Google Scholar
20 British American Journal, 02 18, 1834, report of debate on Welland Canal.Google Scholar
21 It seems reasonable to argue that the dangers of American control were exaggerated, in view of the fact that eventual government purchase was explicitly provided for in the charter and that, after 1828, a mortgage on the property was held by the British Government.
22 See McArthur, Duncan, “History of Public Finance, 1763–1840,” Canada and Its Provinces (Toronto, 1914–1917), IV, part 2, 517. In this connection Creighton goes so far as to describe the governing class as “the party of commercialism, the party which hungered to develop the country by private capital and public expenditure” (“The Economic Background of the Rebellions,” 324). A case could probably be made, however, for the view that this description applies more exactly to the situation in Lower Canada than it does to that in the upper province.Google Scholar
23 The criteria which were required for admission to the inner circle of the Compact have eluded investigation. W. S. Wallace has concluded that: ”All that can be said about the Family Compact is that it was a local oligarchy, composed of men, some well-born, some ill-born, some brilliant, some stupid, whom the caprice of a small provincial society, with a code all its own, had pitchforked into power.” See his The Family Compact (Toronto, 1915) and also Ewart, A. and Jarvis, J., “The Personnel of the Family Compact,” Canadian Historical Review, VII, no. 3, 09, 1926, 209–21.CrossRefGoogle Scholar