History of merchant shipping and ancient commerce, Volume 3 (of 4)

by W. S. Lindsay

Hitherto the enterprise and energies of the colonies had been almost exclusively directed to the important objects of improving the internal navigation of the St. Lawrence from Lake Erie to Quebec, so as to place it in such a state of cheapness and efficiency as would make that route more advantageous as a port of embarkation for a sea voyage than any route through the United States.

Welland Canal.

In the case of the Welland Canal, Canadians could not fail to perceive that the passage of American vessels down and up had contributed to render it profitable. Indeed, the Welland Canal was used extensively by American vessels, as it was a short communication between the two great lakes, and, at the same time, admitted of the passage of large vessels, which, instead of entering the American Erie Canal at Buffalo, proceeded down Lake Ontario to Oswego, where goods are transferred to the canal-boats for transport to New York. In this way a large portion of the revenue from the Welland Canal was derived from the American trade, arising from the free navigation of a part of the internal waters of Canada, and thus Western Canada enjoyed the benefit of a navigation supported to a considerable extent by foreign commerce.

Cost of freight the real question.

It was observed, further, that, if products from the Western States could be transported to the sea more cheaply through Canada than through America, the Canadian route would of course be preferred, and thus the Canadian canals would engross the carrying trade of the North-Western States of America. But if, on the other hand, the advantage of the perfect inland navigation was more than counterbalanced by the rates of freight from Quebec and Montreal to Europe, the people of Western Canada, having no protection in the English markets by using the Canadian lines of communication, would send the whole of their produce by way of New York, and import such articles of foreign consumption as they required by the same route.

So long as the colony enjoyed Protection in the British market no injury to its commerce could arise, because the extent of the protection was generally sufficient to prevent the owners from divesting the Canadian produce of its British character, and it could not become available for the home market of America, unless on the payment of a heavy duty. Even with regard to American produce, the provision in the old Corn Law giving to American wheat and flour the same protection as Canadian if exported through Canada, with the payment of 3s. per quarter duty in the province, was, at most times, a sufficient inducement for many Americans to make shipments to Montreal, as well as for the Canadians to make purchases in the United States. When, however, by the repeal of the Corn Laws all protection was removed, the question became one of mere cheapness of transport; and taking an average of the preceding four years, the difference in freight was no less than 3s. per barrel of flour in favour of New York over Montreal.[60] Even when the benefits enjoyed by Canada in her internal navigation, estimated at 1s. 6d. per barrel, were deducted, there would still remain in favour of New York, 1s. 6d. on each barrel of flour—an advantage quite sufficient to turn the whole export trade into that channel.

Loss to Canada by New York line.

As the United States then admitted the transit of Canadian produce through their territory, the loss it encountered at New York arose from the necessity of complying with the Navigation Laws, which forbade its being imported into England in foreign ships (8 & 9 Vict., cap. 88, sect. 4). At the same time, it must, also, be noticed that, as freight in British ships from New York to England was no higher than the freight in American ships, this restriction, confessedly, had no appreciable influence on the question of transmission through Canada or the United States.

For some time, previously, the import trade of Western Canada, which, by means of protecting duties in favour of British ships and British goods, was forced to come by the St. Lawrence, had been changing its direction, and Montreal, which supplied the whole western country, was becoming deserted by the western merchants. The new Customs Law of that province, while it equalised duties, enabled the consumer to purchase in the cheapest market, and, thus, vastly increased the evil to former importing cities; hence, a very large proportion of the export trade also of Canada had now taken the direction of New York. There was, therefore, naturally a serious apprehension, lest the great public works of the St. Lawrence would cease to be useful and profitable, and, that the commercial connection so many years existing between Western and Eastern Canada would thus be altogether cut off.

It has been unnecessary to refer to the export trade in timber from Canada, as this stood on exceptional grounds. Indeed, a general opinion prevailed that the export of timber from Quebec would probably be carried on, under any circumstances, in British ships specially employed in that branch of trade.