Commercial Entrepreneurial Class
Indeed, the fur trade gave Canada an indigenous entrepreneurial class which was able to shift to other staples when fur declined. It was transcontinental in orientation, commercial in outlook and pro-British out of self-interest.
When fur collapsed in the early 1820’s some Montreal merchants went bankrupt, but most managed to switch their capital into the entrepot trade between Britain and the interior of the continent.
Until 1825, when the Erie canal was opened, the whole basin of the Lower Lakes including the American Old North West was tributary to Montreal. For the next 20 years the Montreal merchants attempted to use their political influence to mobilize internal and metropolitan resources to improve the St. Lawrence waterway system. They hoped to capture from New York the entire export and import trade of the American mid-west. The canals were built, but the gamble failed. This was an expansion of a commercial economy, whose potentialities were conceived as lying not so much in production as in trade.
As the old British mercantile system was dismembered in the 1840’s, Canada was thrown into a crisis. The square timber trade had folded up with the removal of British preferences. The Navigation Acts had been repealed. Efforts at replacing the New England states in the provisioning of the West Indies had failed, and the grand design to capture the continental entrcpot trade had come to nought. Without shelter from the old mercantile system, the ancestors of some of Montreal’s most respected English families opted for annexation to the United States. The continentalist pull had begun.
Moreover, agricultural settlement in Upper Canada was beginning to reach the limits of good land and had started to climb up the marginal lands of the rocky Pre-Cambrian shield. There was no open frontier, as in the United States. With the signing of the Reciprocity Treaty of 1854, Central Canada and the Maritimes were well on the way to becoming a raw-material supplying hinterland to the United States.
But decisive reversal came in 1866. The north having conquered the South, the American metropolis was born. Confident in its ” Manifest Destiny”, the United States turned protectionist and abrogated Reciprocity.
Unable to secure preferential tariffs from Britain or reciprocity with the United States, Canada was thrown on her own resources. At the same time the hostile Northern armies constituted a military threat. Only transcontinental economic and political integration remained. ln 1667, the British Parliament passed the North America Act uniting the three provinces of Canada. New Brunswick, and Nova Scotia under a federal legislature. The voters of New Brunswick had rejected Confederation and the legislature of Nova Scotia would certainly have done it given the opportunity. The Maritime colonies were outmanoeuvred by a team play of British colonial authority and local colonial politicians who have come to be known as the Fathers of Confederation. So, it was that Canada was reluctantly projected into nationhood, the New Dominion of Canada and entered the second phase.