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British imperialism and confederation : the case of British Columbia Reid, David Dougla 1976

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BRITISH IMPERIALISM AND CONFEDERATION: THE CASE OF BRITISH COLUMBIA by DAVID DOUGLAS REID B.A., U n i v e r i s t y of B r i t i s h Columbia, 1972 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n THE FACULTY OF GRADUATE STUDIES (Department of P o l i t i c a l Science) We accept t h i s t h e s i s as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA May 1976 In presenting th i s thes is in pa r t i a l fu l f i lment of the requirements for an advanced degree at the Un ivers i ty of B r i t i s h Columbia, I agree that the L ibrary sha l l make it f ree l y ava i l ab le for reference and study. I fur ther agree that permission for extensive copying of th i s thes is for scho lar ly purposes may be granted by the Head of my Department or by his representat ives. It is understood that copying or pub l i ca t ion of th i s thes is fo r f inanc ia l gain sha l l not be allowed without my wr i t ten permiss ion. Department of P o l i t i c a l Science The Univers i ty of B r i t i s h Columbia 20 75 Wesbrook P l a c e Vancouver, Canada V6T 1W5 Date May 10. 3 976 i i ABSTRACT This t h e s i s examines the for c e s behind B r i t i s h Columbia's entry i n t o the Canadian Federation i n 1871 by examining the h i s t o r i c a l and s t r u c t u r a l circumstances surrounding the r e l a t i v e stages of economic development i n the Colony and the B r i t i s h m e t r o p o l i s . The t h e s i s argues that B r i t i s h Columbia's entry i n t o Confederation occured w i t h i n the t o t a l framework of c a p i t a l i s t expansion i n the nineteenth century. I t occured w i t h i n the context of B r i -t i s h i m p e r i a l i s m . The instruments of B r i t i s h i m p e r i a l i s m and the character of economic development i n the h i n t e r l a n d r e g i o n of the P a c i f i c Northwest, however, changed as the economic s t r u c t u r e of England changed. The road to Confederation f o r B r i t i s h Columbia—as f o r Canada—was e s s e n t i a l l y determined by a s h i f t i n the economic s t r u c t u r e of England from merchant to i n d u s t r i a l c a p i t a l i s m . At a lower l e v e l of g e n e r a l i t y , the t h e s i s concludes that a t r i -angle of trade and c a p i t a l investment e x i s t e d between V i c t o r i a , San F r a n c i s -co and London, and through London,to Montreal. This m e t r o p o l i t a n network t i e d the Colony to Great B r i t a i n and u l t i m a t e l y to Canada. The r u l i n g c l a s s of B r i t i s h Columbia was f i r m l y l i n k e d to B r i t i s h c a p i t a l , and i t a c t i v e l y sought, i n London, Montreal and V i c t o r i a , the achievement of Confederation. i i i TABLE OF CONTENTS Page Abs t r a c t i i L i s t of Tables v L i s t of Figures v i I INTRODUCTION - 1 I I BRITISH COLUMBIA AND HISTORIANS 8 (A) 1870-1930: Idealism 8 (B) Environmentalism 13 (C) M e t r o p o l i t a n i s m 20 (D) B r i t i s h Columbia and Metropol i t a n i s m 26 (e) Conclusion 29 I I I THE STRUCTURE OF BRITISH IMPERIALISM 31 (A) I n t r o d u c t i o n 31 (B) Imperialism: A D e f i n i t i o n 33 (C) Merchant C a p i t a l i s m and I n d u s t r i a l C a p i t a l i s m 37 (D) M e r c a n t i l i s m and B r i t i s h Expansion 42 (E) I n d u s t r i a l C a p i t a l i s m and Imperialism 47 (F) Conclusion 51 IV THE FUR TRADE AND BRITISH EXPANSION: 1785-1858 53 (A) I n t r o d u c t i o n 53 (B) The Maritime Fur Trade 57 (C) The C o n t i n e n t a l Fur Trade 66 (D) "Imperialism of Monopoly" 70 (E) Colonial-Company-Rule: 1849-1858 80 ( i ) Land" 80 ( i i ) A g r i c u l t u r e 83 ( i i i ) C a p i t a l Investment 85 ( i v ) "Family-Compact-Company" 90 (F) The Fur Trade and C a p i t a l Accumulation 100 ( i ) The Northwest Company 100 ( i i ) The Hudson's Bay Company 103 (G) Conclusion 108 V ANGLO-CANADIAN EXPANSIONISM 111 (A) I n t r o d u c t i o n 111 (B) The Rise and F a l l of the Second Com-m e r c i a l Empire of the St. Lawrence 114 i v (C) The 1850s: Railways and Industry 117 (D) The Canadian R u l i n g Class and Westward Expansion 120 (E) B r i t i s h F i n a n c i a l C a p i t a l and Confederation 131 (F) Conclusion 137 VI THE ECONOMIC STRUCTURE OF COLONIAL BRITISH COLUMBIA 140 (A) I n t r o d u c t i o n 140 (B) The Dominant Staples ( 141 (C) Rresource E x t r a c t i v e Economy 145 (D) P e r s i s t e n c e of the Economic s t r u c t u r e 149 (E) Conclusion 151 VII BRITISH COLUMBIA AND CONFEDERATION 154 (A) I n t r o d u c t i o n 154 (B) Gold and Commercial C a p i t a l i s m 155 ( i ) Gold and Mercant C a p i t a l 256 ( i i ) V i c t o r i a : Regional M e t r o p o l i s 150 ( i i i ) The F i n a n c i a l S t r u c t u r e 154 ( i v ) T r a n s p o r t a t i o n and the P u b l i c Debt 5^5 (v) P u b l i c Finance and Regional Union ^gg (C) The M e t r o p o l i t a n Network yii ( i ) The Influence of San Fra n c i s c o 2j2 ( i i ) T r i a n g l e of Trade and Investment y]S ( i i i ) V i c t o r i a and B r i t i s h M e r c a n t i l e Houses 179 (D) The B r i t i s h M e r c a n t i l e E l i t e and Confederation ig2 (E) B r i t i s h Merchant Banks and Confederation j g i (F) Summary and Conclusion ^gg V I I I CONCLUSION, ' 204 IX BIBLIOGRAPHY 209 LIST OF TABLES Page TABLE I Export of Commodities from B r i t i s h Columbia, 1872 146 TABLE I I The Value of Staple Exports from B r i -t i s h Columbia, Selected Years; and the T o t a l Value of Production of M i n e r a l s i n B r i t i s h Columbia, Selected Years 148 TABLE I I I D i s t r i b u t i o n of the Labour Force i n B r i t i s h Columbia, Selected Years 150 TABLE IV T o t a l Exports from B r i t i s h Columbia, 1872 174 TABLE V Exports of Forest Products from the Burrard I n l e t M i l l s , 1870 175 LIST OF FIGURES FIGURE 1 O r g a n i z a t i o n a l Time Chart 1 I INTRODUCTION In t h i s t h e s i s I plan to examine the f o r c e s behind B r i t i s h Columbia's entry i n t o the Canadian Federation i n 1871. The f o l l o w i n g questions were asked: (1) Why d i d the Colony of B r i t i s h Columbia j o i n Canada when there seemed to be powerful i n f l u e n c e s and for c e s working against i t s entry i n t o Confederation? (2) What was the nature and character of B r i t i s h i m p e r i a l i s m i n the P a c i f i c Northwest? What were the instruments of B r i t i s h imperialism? (3) What r o l e d i d the f u r trade have i n maintaining B r i t i s h para-mountcy i n the region? (4) What i n f l u e n c e d i d San Francisco exert i n the socio-economic development of B r i t i s h Columbia? Was economic power i n the Colony the sol e domain of the Americans? What was the character of the economic and p o l i t i -c a l e l i t e i n B r i t i s h Columbia, and what r o l e d i d they have i n the colony's entry i n t o Confederation? (5) What was the r o l e of merchant and f i n a n c i a l c a p i t a l on the road to Confederation f o r B r i t i s h Columbia? (6) What was the s t r u c t u r a l r e l a t i o n s h i p between the P a c i f i c Northwest and Great B r i t a i n , Canada and the United States i n the pre-confed-e r a t i o n period? What were the economic linkages? These are j u s t some of the questions asked i n t h i s t h e s i s . I hope to be able to answer them by examining the p o l i t i c a l economy of c o l o n i a l B r i t i s h Columbia i n both i t s l o c a l and i n t e r n a t i o n a l context. This t h e s i s , however, i s not an attempt to provide a d e t a i l e d h i s t o r y of the p e r i o d up to 1871, but r a t h e r to o u t l i n e the general p a t t e r n of h i s t o r i c a l development i n 2 a meaningful way. This study w i l l not be o r i g i n a l i n the sense of b r i n g i n g to l i g h t new and p r e v i o u s l y unpublished i n f o r m a t i o n . On the c o n t r a r y , i t i s hoped that i t s s i g n i f i c a n c e can be found i n the way i n which h i s t o r i c a l events and phenomena are r e i n t e r p r e t e d . I t i s an attempt to provide not only a b a s i s f o r f u t u r e research, but a l s o to point out the usefulness of h i s t o r i -c a l m a t e r i a l i s m as a t h e o r e t i c a l p e r s p e c t i v e f o r the study of the s o c i o -economic r e l a t i o n s of B r i t i s h Columbia. The t h e s i s i s d i v i d e d i n t o eight chapters. Chapter I I , " B r i t i s h Columbia and H i s t o r i a n s " , i s an a n a l y s i s of the h i s t o r i o g r a p h y of B r i t i s h Columbia i n the pre-confederation p e r i o d ; i t examines the v a r i o u s i n t e r p r e -t a t i o n s put f o r t h to e x p l a i n why the Colony j o i n e d Canada i n 1871. The f o l l o w i n g question was asked: Where d i d the h i s t o r i a n s of B r i t i s h Columbia f i n d the c o n d i t i o n s of the r i s e , e v o l u t i o n and f u n c t i o n i n g of a s o c i a l f o r -mation? This chapter emphasizes the need f o r a m e t r o p o l i t a n p e r s p e c t i v e ; a metropolitanism that (1) moves from the d e s c r i p t i v e l e v e l i n t o a wider t h e o r e t i c a l framework, and (2) takes i n t o c o n s i d e r a t i o n the t o t a l framework of c a p i t a l i s t expansion and development i n the nineteenth century. That i s , a p e r s p e c t i v e that e x p l i c i t l y recognizes the i m p e r i a l i s m of the m e t r o p o l i t a n center and the s t r u c t u r a l r e l a t i o n s that l i e behind i t s outward form. This chapter does not pretend to be a c l e a r demonstration of the inadequacies of the v a r i o u s approaches put f o r t h by the h i s t o r i a n s of B r i t i s h Columbia. On the c o n t r a r y , i t i s hoped that i t w i l l provide the reader w i t h an opportun-i t y to compare the p e r s p e c t i v e of t h i s t h e s i s from other approaches. In other words, the usefulness of the approach suggested here and the assump-t i o n s that i t i s based upon w i l l be demonstrated i n the "doing"; i n the 3 way i n which i t i s a p p l i e d and i n the questions i t answers. Chapter I I I , "The St r u c t u r e of B r i t i s h Imperialism", examines the nature and character of B r i t i s h i m p e r i a l i s m i n the nineteenth century. A ba s i c theme of t h i s t h e s i s i s that the road to Confederation f o r B r i t i s h Columbia, as f o r Canada, was e s s e n t i a l l y determined or p a r a l l e l e d by a s h i f t i n Great B r i t a i n from merchant c a p i t a l i s m to i n d u s t r i a l c a p i t a l i s m , and thus, i n the transformation of the nature and character of B r i t i s h i m p e r i a l i s m . The theme of the s h i f t from m e r c a n t i l i s m , the form of i m p e r i a l i s m associated w i t h merchant c a p i t a l i s m , to the " i m p e r i a l i s m of f r e e trade", the form asso-c i a t e d w i t h i n d u s t r i a l c a p i t a l i s m , w i l l be developed throughout the t h e s i s . Therefore, i n order to prepare the reader f o r a b e t t e r understanding of t h i s theme, t h i s chapter w i l l provide a d e f i n i t i o n of i m p e r i a l i s m , and w i l l examine the nature of merchant and i n d u s t r i a l c a p i t a l i s m , and the character of B r i t i s h overseas expansion associated w i t h each phase. Chapter IV, "The Fur Trade and B r i t i s h Expansion: 1785-1858", examines the p a t t e r n of commercial p e n e t r a t i o n and settlement i n the P a c i f i c Northwest: How d i d the region develop? What was the sequence of develop-ment? What r o l e d i d the Hudson's Bay Company perform i n i n t e g r a t i n g the reg i o n i n t o B r i t a i n ' s expanding economy and i n maintaining the i m p e r i a l r e -l a t i o n ? What was the nature and s t r u c t u r e of B r i t i s h i m p e r i a l i s m during t h i s period? What was the performance of the Hudson's Bay Company during the per i o d of Company-Colonial-Rule? Did the Company encourage or obstruct settlement and c o l o n i z a t i o n ? These and other questions w i l l be answered i n t h i s chapter. Chapter V, "Anglo-Canadian Expansionism", examines the forces be-hind Canadian western expansion. This chapter i s important f o r the obvious reason that the f u t u r e of the colony of B r i t i s h Columbia could not be 4 i s o l a t e d from the question of Canadian f e d e r a t i o n . The entry of the Colony i n t o Confederation had i t s r o o t s i n the same c o n f i g u r a t i o n of f o r c e s as those that stood behind the road to Confederation f o r Canada. The amalgama-t i o n of the Hudson's Bay Company and the Northwest Company i n 1821 brought Canada's " f i r s t t r a n s c o n t i n e n t a l economic system" to an end. The s o c i o -economic development of the P a c i f i c Northwest and Canada, however, was separate only i n a geographic sense; both regions remained connected by dent of t h e i r r e l a t i o n s h i p to the B r i t i s h m e t r o p o l i s . This chapter w i l l examine the r e l a t i o n s h i p between Canada and Great B r i t a i n . What e f f e c t d i d the breakdown of the " o l d c o l o n i a l system" have on developments i n Canada? What r o l e d i d E n g l i s h f i n a n c i a l c a p i t a l , e s p e c i a l l y the b i g merchant banks of Baring Brothers and Glyns, M i l l s and Company, play i n the road to Confedera-t i o n ? What i n t e r e s t d i d Canadian c a p i t a l i s t s have i n developing a t r a n s -c o n t i n e n t a l commercial system? This chapter w i l l c l e a r l y demonstrate the theme that the s t r u c t u r a l r e l a t i o n s h i p between the Colony and Great B r i t a i n changed as the r e l a t i o n s of production i n the metropole changed. At a funda-mental, s t r u c t u r a l l e v e l , the road to Confederation f o r Canada can be i n t e r -preted as a process of readjustment to the s h i f t from merchant to i n d u s t r i a l c a p i t a l i s m i n the B r i t i s h m e t r o p o l i s . Chapter V I , "The Economic S t r u c t u r e of C o l o n i a l B r i t i s h Columbia", w i l l d escribe the surface c h a r a c t e r i s t i c s of the economic s t r u c t u r e of the Colony by examining s t a t i s t i c s on production and exports a t v a r i o u s p o i n t s i n time. This chapter i s not e s s e n t i a l to the bas i c argument of the t h e s i s . Nevertheless, i f we wish to thoroughly understand the l o g i c of the region's development, an examination of the nature and character of the economy i s e s s e n t i a l . In other words, the economic s t r u c t u r e of B r i t i s h Columbia w i l l be i d e n t i f i e d f o r academic reasons i f nothing e l s e before we begin to 5 analyse the development and e v o l u t i o n of that s t r u c t u r e . F i n a l l y , chapter V I I , " B r i t i s h Columbia and Confederation", w i l l go on to examine the p e r i o d i n which B r i t i s h Columbia was d i r e c t l y admini-stered by the Crown; the p e r i o d of d i r e c t c o l o n i a l r u l e . This was the mer-chant c a p i t a l i s m phase i n the Colony, and i n t h i s regard, the economic s t r u c t u r e w i l l be examined by l o o k i n g at the nature and s t r u c t u r e of c a p i t a l , and the s i z e and mode of u t i l i z a t i o n of the ec onomic s u r p l u s . The period of d i r e c t c o l o n i a l r u l e a l s o roughly c o i n c i d e d w i t h a p e r i o d i n which the l a r g e B r i t i s h merchant or "empire" banks played an i n c r e a s i n g l y dominant r o l e i n the p o l i t i c s of B r i t i s h i m p e r i a l i s m . The c a p i t a l i s t s connected w i t h the b i g merchant banks were engaged i n i n t e r n a t i o n a l f inance and trade, and they put B r i t i s h c a p i t a l to work i n the i n t e r e s t of binding f o r e i g n and c o l o n i a l mar-kets to the B r i t i s h f a c t o r y and i n developing sources of raw m a t e r i a l s and f o o d s t u f f s . London was the center of the i n t e r n a t i o n a l f i n a n c i a l and t r a d i n g operations; i t was the center of B r i t i s h i m p e r i a l p o l i c y . How was B r i t i s h Columbia l i n k e d to t h i s center? What was the m e t r o p o l i t a n network? What was the nature and character of the r u l i n g c l a s s i n the Colony and how was i t connected to the m e t r o p o l i t a n centers of London, Montreal and San Francisco? Was p o l i t i c a l possession the c o n t r o l of s t a t e power the only means by which Great B r i t a i n was able to maintain t e r r i t o r i a l c o n t r o l and to preserve her s t r a t e g i c i n t e r e s t s i n the P a c i f i c Northwest? Were there other, more fundamental, f a c t o r s r e s p o n s i b l e f o r the maintenance of the B r i t i s h - C a n a d i a n connection? This chapter, by answering these and other questions, w i l l sug-gest an e x p l a n a t i o n of why the Colony of B r i t i s h Columbia was e v e n t u a l l y i n t e g r a t e d i n t o the new and expanding economy of Canada. 6 On the f o l l o w i n g page, a Time Chart (Figure 1 ) , to which you may r e f e r , has been inc l u d e d . I t has been designed to a s s i s t the reader i n o r g a n i z i n g the v a r i o u s dates and terms used i n t h i s study. FIGURE It ORGANIZATIONAL TIME CHART 1800 1821 1846 1849 1858 THE STRUCTURE OF B R I T I S H IMPERIALISM MERCHANT. CA.PITALISM-M e r c e n t i l i s m Waterloo (1815) 1666 — I — 1871 Founding of Colony of VI C a l i f o r n i a Gold Rush Repeal of Corn,Laws BRITISH EXPAKSIGN- IN THE PACIFIC NORTH WEST FUR TRADE AND BRITISH. EXPANSION ~ "Imperialism of Monopoly" THE FUR TRADE MARITIME FUR TRADE Founding of Colony|of EC j . F r a s e r R i v e r Gold Rush INDUSTRIAL CAPITALISM Union of . VI & 3C "Imperialism of Free Trade" BC Enters Confeder-t i o n H3C COLONIAL RULE " Fami ly-C ompany-Coimect" DIRECT COLONIAL RULE Merchant C a p i t a l i s m Phase i n EC ^ B r i t i s h M e r c a n t i l e . E l i t e Amalgamation of HBC & NWC Oregon Boundary Dispute CONTINENTAL FUR TRADE DEVSLOR'ENTS IN CANADA 1st COMMERCIAL EMPIRE OF THE ST LAWRENCE Se l e c t Committee on HBC| (1857) Mounting Opposition to HBC 7*^ 2nd COMMERCIAL EMPIRE OF THE ST LAWRENCE Transfer of Rupert's Land to Canada (18.69) <g^_. ( t r a n s i t i o n ) ^ EXPANSION & CONSOLIDATION Annexation Manifesto i i F i n a n c i a l c r i s i s I End of C a p i t a l Imports I F a i l u r e of Grand Trunk RR Confederation (186?) 8 BRITISH COLUMBIA AND HISTORIANS  (A) 1870-1930: Idealism The h i s t o r i a n s of B r i t i s h Columbia who wrote before 1930 were very much concerned w i t h e x p l a i n i n g the reasons why B r i t i s h Columbia d i d not j o i n the United S t a t e s , rather than attempting to o u t l i n e the causes of the Colony's entry i n t o the Canadian Federation. Their concern can be summed up i n two words: Annexation or Confederation?^" There seemed to be, on the s u r f a c e , a number of good reasons to s u b s t a n t i a t e t h e i r concern. C o l o n i a l B r i t i s h Columbia was i s o l a t e d g e o g r a p h i c a l l y from Canada and Great B r i t a i n , and the n a t u r a l p u l l of trade and communication a l l seemed to suggest that the B r i t i s h Colony on the P a c i f i c Coast would e v e n t u a l l y j o i n the United States. As' Goldwin Smith would say: "The primary f o r c e s " of "geography, commerce, i d e n t i t y of race, language, and 2 i n s t i t u t i o n s " were bound to triumph i n the end. San Francisco was the dominant metropolis of the North P a c i f i c Coast up to the l a t e 1880s and e a r l y 1890s, and V i c t o r i a was i t s northern outpost. The p o p u l a t i o n of V i c t o r i a never climbed above 4,000 i n the 1860s, whereas the p o p u l a t i o n of San F r a n c i s c o , which stood at 34,000 i n 1850, soared to over 60,000 i n the 1860s. H i s t o r i a n s of l a t e r p e r i o d wrote: "San F r a n c i s c o was Some examples are: R.E. G o s n e l l , A H i s t o r y of B r i t i s h Columbia (Vancouver, Lewis Publ. Co., 1906); F.W. Howay & E.O. S c h o f i e l d , B r i t i s h Columbia: The Making of a Province (Toronto, Ryerson Press, 1928); Walter N. Sage, "The C r i t i c a l P e r i o d of B r i t i s h Columbia H i s t o r y " , P a c i f i c H i s t o r i c a l Review, V o l . I (1932), pp. 425-443; W.N. Sage, "The Annexation Movement i n B r i t i s h Columbia", Royal So c i e t y of Canada, Proc. & Trans. (1927), pp. 97-110; Hugh L. Keenleyside, " B r i t i s h Columbia—Annexation or Confederation", Canadian H i s t o r i c a l A s s o c i a t i o n  Reports (1928). For a very u s e f u l survey of the work by h i s t o r i a n s on the c o l o n i a l p e r i o d , see, D a n i e l T. G a l l a c h e r , "Bureaucrats or Business-men? H i s t o r i a n s and the Problems of Leadership i n C o l o n i a l B r i t i s h Columbia", S y e s i s , V o l . 3, (1970), pp. 173-185. 2 Goldwin Smith, Canada and the Canadian Question (Toronto, U n i v e r s i t y of Toronto Press, 1970 (1891), p. 45. 9 V i c t o r i a ' s connecting l i n k w i t h the outside world. The Shipping l i n e s to the P a c i f i c Northwest, to Panama, and across the P a c i f i c had t h e i r headquarters i n San F r a n c i s c o , which a l s o became the terminus of the 3 Union P a c i f i c Railway i n 1869". The "primary f o r c e s " of commerce and geography were p u l l i n g c o l o n i a l B r i t i s h Columbia i n t o the o r b i t of the United S t a t e s . According to these e a r l y h i s t o r i a n s , however, the "primary f o r c e s " of commerce and geography were not the only i n f l u e n c e s at work. Two other f a c t o r s were of prime importance: one was the growing d i s i n t e r e s t on the part of the E n g l i s h i n t h e i r c o l o n i e s , commonly r e f e r r e d to as " L i t t l e Englandism", and the other was the growing t h r e a t posed by American expansionism. I t was argued that the E n g l i s h c o l o n i z i n g s p i r i t was at a very low ebb. A f t e r the Napoleonic Wars, the E n g l i s h were being slo w l y converted to the " f r e e trade" philosophy of Cobden and B r i g h t , and the c o l o n i e s were becoming viewed as unnecessary and expensive l u x u r i e s . F ollowing t h i s i n t e r p r e t a t i o n , Hugh Keenleyside wrote: "On the whole, E n g l i s h o p i n i o n was adverse, r a t h e r than favourable to any strong e f f o r t to r e t a i n B r i t i s h Columbia, and no very grave obstacles would have been opposed to a peaceful t r a n s f e r to the United S t a t e s , had 4 t h i s been urged by the c o l o n i a l s themselves". At the same time as England was r e t r e a t i n g from her c o l o n i e s , the United States was expanding her c o n t i n e n t a l empire, and her merchants and tr a d e r s were attempting to capture the maritime P a c i f i c trade. In the 1840s Hawaii s h i f t e d i n t o the c o n t i n e n t a l o r b i t of the United St a t e s ; i n 1844 The Crushing Treaty w i t h China was signed; and a decade l a t e r , Perry 3 H. F. Angus, W. N. Sage & F. W. Howay, B r i t i s h Columbia and the  United States (Toronto, Ryerson Press, 1942), p. 184. f Hugh Keenleyside, " B r i t i s h Columbia—Annexation or Confederation?", p. 36. 10 f o r c e f u l l y opened the doors of Japan to trade: a l l of these i n d i c a t e d the growing i n t e r e s t of the Americans i n the P a c i f i c Ocean. The Oregon Treaty was signed i n 1846, opening the Northwest to American s e t t l e r s , and the discovery of gold i n C a l i f o r n i a i n 1849 v i r t u a l l y opened the floodgates of immigration. Between 1850 and 1870 the popu-l a t i o n of C a l i f o r n i a climbed from 92,597 to 560,247, and by 1870 the p o p u l a t i o n of Washington and Oregon was n e a r l y f i v e times as great as that of B r i t i s h Columbia. Even i f B r i t i s h Columbia was able to withstand the i n f l u x of American s e t t l e r s i n t o the r e g i o n , however, there s t i l l remained the ex-p l i c i t p o l i t i c a l and m i l i t a r y t h r e a t posed by the United States. A f t e r the C i v i l War the m i l i t a r y s t r e n g t h of the United States was at i t s peak and was u n r i v a l l e d i n the world. The Fenian r a i d s , the purchase of Alaska i n 1867, the suggestion i n 1869 that B r i t i s h Columbia be turned over to the United States as part of the l i q u i d a t i o n of the Alabama Claims, and the Annexation P e t i t i o n c i r c u l a t e d and addressed to President Grant by a group of r e s i d e n t s of B r i t i s h Columbia a l l seemed to suggest but one c o n c l u s i o n : the annexation of B r i t i s h Columbia by the United St a t e s . Keenleyside summed up the general thread of t h i s argument i n the f o l l o w i n g manner: Due to a m u l t i p l i c i t y of circumstances i n the years before Confederation, the annexation of B r i t i s h Columbia to the United States appeared to be the almost i n e v i t a b l e s o l u t i o n of what was from a B r i t i s h p o i n t of view, a very unfortunate s i t u a t i o n . An i n s i g n i f i c a n t i n c i d e n t might e a s i l y have a l -tered the whole course of western h i s t o r y and have given the status of American t e r r i t o r y to a r e g i o n ^hat i s today the r i c h e s t s e c t i o n of the Canadian Dominion. I b i d . , p. 34 11 I f a " m u l t i p l i c i t y of circumstances" commerce, communications, geo-graphy, " L i t t l e Englandism", and "Manifest D e s t i n y " a l l conspired to p u l l c o l o n i a l B r i t i s h Columbia i n t o the American empire, then why d i d B r i t i s h Columbia j o i n Canada? The answer was to be found i n the i n t e n t i o n a l a c t i v i t y of prominent c o l o n i a l o f f i c i a l s , e s p e c i a l l y James Douglas, Matthew Begbie and Colonel Moody, and i n the statesmanship of John A. MacDonald and C a r t i e r . As one recent commentator has observed: I n t r i g u e d w i t h the drama of Mainland gold rushes, the e x c i t i n g r i s e of V i c t o r i a from f o r t to c i t y , and the spec-t a c u l a r development of B r i t i s h Columbia as a Crown Colony, h i s t o r i a n s between the 1870s and 1930s o f f e r e d accounts so r i f e w i t h references to James Douglas and h i s c o l o n i a l o f f i c i a l s that c o n t r i b u t i o n s of other g r o u p s — n o t a b l y mer-chants, p r o f e s s i o n a l s , j o u r n a l i s t s , and a r t i s e n s — a p p e a r e d pale indeed. Nor d i d the imbalance stop there. By focus-ing a t t e n t i o n on the bureaucrats, e s p e c i a l l y James Douglas, our e a r l y c h r o n i c l e r s produced a l a r g e number of what were l i t t l e more than p o l i t i c a l b i o g r a p h i e s . These e a r l y h i s t o r i a n s tended to concentrate on the achievements of Governor Douglas and h i s o f f i c i a l s at the expense of the i n f l u e n c e of l a r g e r environmental and m e t r o p o l i t a n f o r c e s . North American i n f l u e n c e s were ignored, except f o r the emphasis on the powerful t h r e a t of the United S t a t e s . Canada was the r e s u l t of a " D e c l a r a t i o n of Independence" from the United States. The attachment to the values of the Empire were " t h i c k e r than water". The c r e a t i o n of Canada was the supreme p o l i t i c a l achievement of a group of dedicated p o l i t i c i a n s and o f f i c i a l s who, be-l i e v i n g i n the s u p e r i o r values associated w i t h Great B r i t a i n , were able to thwart the powerful Republic to the south. And, the h i s t o r i a n s who were i n tune w i t h t h i s i n t e r p r e t a t i o n , when they came to d i s c u s s the G a l l a c h e r , " H i s t o r i a n s and the Problem of Leadership i n C o l o n i a l B r i t i s h Columbia", p. 173. 12 r e l a t i o n s h i p of the Colony to England, spent a great d e a l of t h e i r time scouring C o l o n i a l O f f i c e dispatches or surveying the a t t i t u d e s of i n -d i v i d u a l o f f i c i a l s i n the hope of d i s c o v e r i n g the key to the process of s o c i e t a l change. In general, these e a r l y h i s t o r i a n s found the c o n d i t i o n s of the r i s e , e v o l u t i o n and f u n c t i o n i n g of a system i n the a t t i t u d e s and p e r s o n a l i t i e s of governors, p o l i t i c i a n s and bureaucrats. I t was t h e i r " i d e a " of con-f e d e r a t i o n and the maintenance of the B r i t i s h connection that explained the o r i g i n of the Canadian Federation. P o l i t i c a l biographies provide l i t t l e i n the way of a concrete understanding of s o c i e t y and h i s t o r y . The i d e a l i s m of the e a r l y h i s t o r -ians of B r i t i s h Columbia l e d to an approach that concentrated on the i n t e n t i o n a l a c t i v i t y of prominent o f f i c i a l s and bureaucrats. Such an approach not only ignores the i n f l u e n c e s of other s o c i a l groups and c l a s s e s , but more i m p o r t a n t l y , the u n i n t e n t i o n a l p r o p e r t i e s inherent i n s o c i a l r e l a t i o n s ; that i s , p r o p e r t i e s not belonging to man's conscious-ness. The concept of "immediate" experience i s s c i e n t i f i c a l l y meaning-l e s s . The s t a r t i n g point f o r the study of s o c i e t y and h i s t o r y cannot be from i n d i v i d u a l s , but from the r e l a t i o n s between them. The u l t i m a t e b a s i s f o r the transformation of an economic and s o c i a l system cannot be found i n man's consciousness. 13 (B) Environmentalism The i d e a l i s m of these e a r l y h i s t o r i a n s was redressed somewhat w i t h the emergence of "environmentalism" i n Canadian h i s t o r i o g r a p h y . ^ The impact of F r e d e r i c k Jackson Turner, the American h i s t o r i a n , s p i l l e d over i n t o the academic c i r c l e s of Canada. S. D. C l a r k , a Canadian s o c i o l o -g i s t , s u c c i n c t l y c h a r a c t e r i z e d t h i s school when he wrote: "The forms of community o r g a n i z a t i o n which developed i n Canada represented the a d j u s t -ments of the p o p u l a t i o n to t h e i r North American environment. L i k e s i m i l a r forms across the border, they were the products of s o c i a l experiments g forced upon a people faced w i t h new c o n d i t i o n s of l i v i n g " . W. N. Sage, l i k e other Canadian h i s t o r i a n s , was i n f l u e n c e d by f r o n t i e r i s t themes and concepts, and i n 1930 he was the f i r s t to i n c o r p o r a t e these themes and 9 concepts i n t o a study on c o l o n i a l B r i t i s h Columbia. Environmentalism was developed even f u r t h e r i n r e l a t i o n to B r i t i s h Columbia h i s t o r y w i t h the p u b l i c a t i o n of a j o i n t work by H. F. Angus, W. N. Sage, and F. W. Howay i n 1942."'"^ This book s p e c i f i c a l l y attempted to d e l i n e a t e the im-pact of C a l i f o r n i a on B r i t i s h Columbia. In both of these works, however, James Douglas and h i s c o l o n i a l o f f i c i a l s managed to maintain t h e i r cen-t r a l p o s i t i o n . Sage, f o r example, claimed that Douglas was the "Father ^ For an e x c e l l e n t d i s c u s s i o n of the development of Canadian h i s t o r -iography see, J.M.S. Ca r e l e s s , " F r o n t i e r i s m , M e t r o p o l i t a n i s m , and Canadian H i s t o r y " , i n Ramsay Cook, e t . a l . ( e d t s . ) , Approaches to Cana- di a n H i s t o r y (Toronto, U n i v e r s i t y of Toronto Press, 1967), pp. 63-83. g S.D. C l a r k , The Developing Canadian Community, 2nd e d i t i o n , (Toronto, U n i v e r s i t y of Toronto Press, 1968). 9 W. N. Sage, S i r James Douglas and B r i t i s h Columbia (Toronto, 1930). B r i t i s h Columbia and the United States (Toronto, Ryerson Press, 1942). 14 of B r i t i s h Columbia": With a l l h i s shortcomings, of which he has h i s share, S i r James Douglas was a great man, the greatest i n the h i s t o r y of B r i t i s h Columbia. He bridged the gap be-tween the f u r trade and r e s p o n s i b l e government. His f i r m hand was on the helm during the dangerous forma-t i v e years of the two colonies...without Douglas' prompt a c t i o n i n framing r e g u l a t i o n s f o r the entrance of miners i n t o the Fraser R i v e r d i s t r i c t — h o w e v e r p a r t i s a n those r e g u l a t i o n s w e r e — t h e work of^Lyton, Moody, and Begbie could never have taken p l a c e . Turner had argued that the i n d i v i d u a l ' s encounter w i t h the great moving f r o n t i e r of the North American continent was the true source of a l l that was good i n America: democracy, e q u a l i t y , i n d i v i d u a l i s m , r e -12 sou r c e f u l n e s s , e t c . The f r o n t i e r t h e s i s was based on the idea of con-f l i c t : the margins of settlement versus the center of c i v i l i z a t i o n , the for c e s of l i b e r t y and progress p i t t e d against the fo r c e s of tyranny and r e a c t i o n . This t h e s i s e a s i l y l e n t i t s e l f to what Donald Creighton 13 c a l l e d the " L i b e r a l I n t e r p r e t a t i o n of Canadian H i s t o r y " , w i t h i t s i m p e r i a l i s m versus n a t i o n a l i t y , colony to n a t i o n syndrome. The L i b e r a l I n t e r p r e t a t i o n of Canadian H i s t o r y was c o n t i n e n t a l i s t i n outlook ( l i k e Mackenzie-King), and emphasized the emancipation of Canada from Europe i n e x t e r n a l r e l a t i o n s and the reform movements and winning of r e s p o n s i b l e government i n domestic a f f a i r s . The moral i m p l i c a t i o n of the f r o n t i e r Sage, S i r James Douglas and B r i t i s h Columbia, p. 347. A l s o c i t e d i n G a l l a g e r , op. c i t . , p. 179. 12 see F. J . Turner, F r o n t i e r i n American H i s t o r y (New York, 1920). 13 Such an i n t e r p r e t a t i o n , not without reason, co i n c i d e d w i t h the r i s e of Mackenzie King, 0. D. Skelton, e t . a l . , see Donald Creighton, "Towards the Discovery of Canada (1956)", i n Towards the Discovery of  Canada (Toronto, MacMillan 1972). 15 s c h o o l — t h e "American v e r s i o n of the eighteenth century d o c t r i n e of the 14 Noble Savage" was never f a r from the surface. Sage p r a i s e d the a c t i v i t y of Douglas, but at the same time argued that he acted as a mediating i n f l u e n c e on the " f r o n t i e r s p i r i t " . Douglas may be the Father of B r i t i s h Columbia", but he was a l s o p a r t i a l l y r e s p o n s i b l e f o r the " c o n s t i t u t i o n a l backwardness" of c o l o n i a l B r i t i s h Columbia and the slow and tenuous development of r e s p o n s i b l e government. The democratic f o r c e s of the North American environment c o n f l i c t e d w i t h the p r i v i l e g e s and a u t o c r a t i c tendencies of the Old World. With reference to Canada and the United States i n gene r a l , S. D. C l a r k wrote: Geography had drawn the two co u n t r i e s together s o c i a l l y , yet there are many s t r i k i n g d i f f e r e n c e s between them. Powerful f o r c e s have operated to b r i n g about a d i s t i n c -t i v e development of many important aspects of Canadian s o c i e t y . The i n f l u e n c e of these f o r c e s was most evident i n the f r o n t i e r . . . I n the United States...few r e s t r a i n t s were imposed upon the opening up of the new areas of settlement... In Canada, however, the r i s k of abso r p t i o n by the souther neighbour was too great to permit ttjig un-r e s t r i c t e d development of new areas of settlement. B e c a u s e o f t h i s threat the g r i p of p o l i t i c a l a u t h o r i t y could not be rela x e d w i t h i n new areas of settlement i n Canada as i t tended to be south of the border. The r e s u l t was that "the Canadian n a t i o n grew mainly out of the fo r c e s of a c o u n t e r - r e v o l u t i o n a r y c h a r a c t e r " . " ^ 14 I b i d . , p. 57. C l a r k , "The Canadian Community and the American C o n t i n e n t a l System", i n The Developing Canadian Community, p. 188. 1 6 I b i d . , p. 189. ^ I b i d . , p. 191. Compare t h i s to S. M. L i p s e t , "Revolution and Counter-Revolution: The United States and Canada", i n O.M. Kruhlak, et . a l . ( e d t s ) , The Canadian P o l i t i c a l Process (Toronto, 1973, r e v i s e d e d i t i o n ) , pp. 3-29. 16 Environmentalism drew the a t t e n t i o n of h i s t o r i a n s to important c o n t i n e n t a l i n f l u e n c e s and away from the very l i m i t e d s t u d i e s of c o l o n i a l o f f i c i a l s , but at the same time i t tended to neglect overseas 18 or maritime i n f l u e n c e s , and most i m p o r t a n t l y , the e f f e c t of l a r g e m e t r o p o l i t a n centers on the development of the P a c i f i c Northwest. As some h i s t o r i a n s argued, expansionism i n Canada was never an independent process. I t was not the western f r o n t i e r that was determined i n the de-velopment of the s o c i a l and p o l i t i c a l s t r u c t u r e s of the east, and the n a t i o n i n general; the true l i n e s of i n f l u e n c e ran from the East to the West. As Hugh A i t k e n wrote i n 1952: "...expansionism i n Canada has been 19 l a r g e l y induced r a t h e r than autonomous"; i t was the s t a t e that played the c r u c i a l r o l e . In Western Canada between 1821 and 1870, the Hudson's Bay Company performed what could be c a l l e d the " s t a t e f u n c t i o n s " i n the area. The Hudson's Bay Company, however, followed a p o l i c y of "conser-v a t i o n " , and a f t e r the disc o v e r y of gold i n B r i t i s h Columbia such a p o l i c y became an i n e f f e c t i v e d eterrent to American expansionism. The Hudson's Bay Company was t h e r e f o r e "compelled to cede part of i t s c o n t r o l to other agencies. Forces of expansionism, emanating p r i n c i p a l l y from Donald Creighton laments t h i s f a c t when he w r i t e s : " . . . i f they had ever stopped to t h e o r i z e about the matter, they would doubtless have reached the unremarkable c o n c l u s i o n that B r i t i s h North America was the outcome of an encounter between the West European i n h e r i t a n c e and the North American environment. In the 1920s and 1930s, however, these o l d -fashioned opinions began to be regarded as p a i n f u l evidences of the con-tinuance of the c o l o n i a l mind. The Canadian h i s t o r i a n s and s o c i a l s c i e n t i s t s . . . sought i n s t i n c t i v e l y to depress the importance of Europe as the source of Western c i v i l i z a t i o n and to e x a l t the c r e a t i v e power of North America. North America was s i n g l e , s e l f - s u f f i c i e n t , and a l l -powerful". "Towards the Discovery of Canada", op. c i t . , p. 56. 19 H. G. J . A i t k e n , "Defensive Expansion: The State and Economic Growth i n Canada", i n Easterbrook and Watkins ( e d t s ) , Approaches to  Canadian Economic H i s t o r y (Toronto, McClelland & Steward, 1967), p. 221. 17 the United S t a t e s , could not be contained by any defensive measures a v a i l a b l e to a f u r - t r a d i n g o r g a n i z a t i o n . Only by union w i t h the other B r i t i s h Colonies could the necessary resources be m o b i l i z e d to hold the l i n e s of defence against American expansionism and create a n a t i o n a l the s t a t e played a commanding r o l e i n the economic development of Canada, but to argue that t h i s r o l e was forced upon the s t a t e because of the th r e a t posed by the United States i s extremely mi s l e a d i n g . The problem i s doubly compounded i f the s t a t e i s equated w i t h the i n t e n t i o n a l a c t i -v i t y of i n d i v i d u a l s , and under such circumstances we are brought back to the p o s i t i o n that argues that the transformation of a system i s the r e -s u l t of the i n t e n t i o n a l a c t i v i t y of i n d i v i d u a l s . The problem w i t h t h i s p o s i t i o n i s that even though i t takes e n v i r -onmental f a c t o r s i n t o c o n s i d e r a t i o n i t i s s t i l l based on the assumption that Canada was p r i m a r i l y a p o l i t i c a l c r e a t i o n : Canada emerged on the northern h a l f of the continent i n s p i t e of geography. C l a r k argues that i t was geography i t s e l f that was r e s p o n s i b l e f o r n u r t u r i n g the p o l i t i c a l a c t i v i t y that created Canada. C l a r k w r i t e s : Geography, which favoured i n d i v i d u a l , e n t e r p r i s e and l i m i t e d p o l i t i c a l i n t e r f e r e n c e i n the conduct of econo-mic, s o c i a l and r e l i g i o u s a f f a i r s over a l a r g e part of the c o n t i n e n t , favoured on t h i s part of the continent l a r g e - s c a l e b u r e a u c r a t i c forms of2<j>rganization and wide-spread i n t e r v e n t i o n by the State. t r a n s c o n t i n e n t a l economy". 20 I t i s e s s e n t i a l l y c o r r e c t to argue that 20 I b i d p. 203. C l a r k , "Canadian and the American Value System", i n The  Developing Canadian Community, p. 232. 18 The argument that i s o f t e n made by the " e n v i r o n m e n t a l i s t s " w i t h regard to B r i t i s h Columbia i s that her economy was dominated by the United S t a t e s , whereas p o l i t i c a l power managed to remain i n the hands of the B r i t i s h . In t h i s regard, W i l l a r d E. I r e l a n d wrote: One of the most i n t e r e s t i n g anomalies i n the h i s t o r y of B r i t i s h Columbia a r i s e s from the f a c t that the strongest s i n g l e impellant i n the c r e a t i o n of what e v e n t u a l l y became Canada's P a c i f i c province was the f e a r of American expansionist tendencies west of the Rocky Mountains and yet that tendency, although e s t a -b l i s h e d i n f a c t by p o p u l a t i o n movements, never s e r i o u s l y ^ t r a n s f e r r e d i t s e l f i n t o the a r e n a l of p r a c t i c a l p o l i t i c s . Why was t h i s ? I t was because "...the threat of American expansion, whe-ther r e a l or imagined, had r e s u l t e d i n more concrete e f f o r t s to s a f e -guard B r i t i s h sovereignty, and, throughout the gold-rush period "the government continued to remain f i r m l y i n the c o n t r o l of pre-gold-rush 23 B r i t i s h o f f i c i a l s " . This s o r t of argument i s not r e s t r i c t e d to the past. W. G. Shelton, the e d i t o r of a recent anthology of essays on B r i t i s h Columbia and Confederation, argues i n the i n t r o d u c t i o n that the annexation of B r i t i s h Columbia to the United States was economically p r a c t i c a l and reasonable, but i n the end, p o l i t i c s was more powerful than economics. Shelton w r i t e s : 22 W i l l a r d E. I r e l a n d , " B r i t i s h Columbia's American Her i t a g e " , The Canadian H i s t o r i c a l A s s o c i a t i o n , 1948, p. 67. 23 I b i d . , p. 67; a l s o see Angus, Sage & Howay, op. c i t . , p. 142: "The few E n g l i s h i n h a b i t a n t s were completely swamped by t h i s great wave of American immigration. V i c t o r i a became f o r a time American, but i t s a d m i n i s t r a t i o n remained i n the hands of E n g l i s h o f f i c i a l s " . 19 Thus the entry of B r i t i s h Columbia i n t o Confederation was a t y p i c a l l y Canadian phenomena. I t was a d e c i s i o n j u s t i f i e d on progmatic, not i d e o l o g i c a l , grounds, but at the same time, l o y a l t y to a set of^values loomed l a r g e r than mere economic advantage. In other words, the s u r v i v a l of B r i t i s h Columbia was the r e s u l t of a h i s t o r i c a l , p o l i t i c a l s t r u g g l e w i t h geography. The n a t u r a l f o r c e s of trade and communications were i n the general d i r e c t i o n of north and south, not east and west. The Dominion of Canada, which has no economic or geographical u n i t y of i t s own, was purely the r e s u l t of a p o l i t i c a l  c r e a t i o n the " p o l i t i c a l being conceived as an autonomous and independ-ent realm, a realm c o n s t i t u t e d by the behaviour and a c t i v i t y of i n d i v i d -u a l s i n what are defined as p o l i t i c a l r o l e s : p r i m a r i l y those a s s o c i a t e d w i t h the formal governmental s t r u c t u r e s . The environmental and geographic determinism of t h i s approach i s q u i t e evident. Environmentalism attempts to r e i n t e r p r e t North American s o c i e t y and h i s t o r y on the b a s i s of the m a t e r i a l c o n d i t i o n s of the adap-t a t i o n of man to d e f i n i t e environments. Man adapts himself to the en-vironment by i n v e n t i n g and using c e r t a i n techniques or o r g a n i z a t i o n a l forms, and t h i s i n t u r n " c r e a t e s " or "produces" a p a r t i c u l a r type of l i f e - s t y l e and a p a r t i c u l a r set of v a l u e s , a t t i t u d e s and b e l i e f s . In the case of the United S t a t e s , the environment i s a l l powerful; her f r o n t i e r experience r e s u l t e d i n i n d i v i d u a l e n t e r p r i s e , n o n - i n t e r v e n t i o n by the S t a t e , and a p a r t i c u l a r value system. In the case of Canada, the Shelton (ed.), B r i t i s h Columbia and Confederation ( V i c t o r i a , U n i v e r s i t y of V i c t o r i a P r ess, 1967), p. 15. Paul A. P h i l i p s ' a r t i c l e i n the same volume, "Confederation and the Economy of B r i t i s h Columbia", f o l l o w s the same argument: "Economically, a good case e x i s t e d f o r union w i t h the United States which without the t a r i f f b a r r i e r would have opened up markets f o r lumber, c o a l and f i s h . Already America was the colony's most important t r a d i n g p a r t n e r . . . " ( 5 9 ) . BUT: "In any case, the p o l i t i c a l commitment to the B r i t i s h connection was strong enough to overcome the economic o b j e c t i o n s . . . " ( 6 0 ) . 20 environment r e s u l t e d i n e l i t i s m and s t a t e i n t e r v e n t i o n because her un-compromising environment demanded mediation by the purposeful a c t i v i t y of p o l i t i c i a n s , o f f i c i a l s and bureaucrats i n order to ensure s u r v i v a l i n the face of great geographic o b s t a c l e s . (C) M e t r o p o l i t a n i s m Harold I n n i s was the f i r s t to break down the conception of the continent as a geographic u n i t and to give a much more e x p l i c i t recog-n i t i o n to the r o l e of the economy i n s o c i a l change. "The present Domin-25 io n emerged not i n s p i t e of geography but because of i t " . Canada i s not p u r e l y a p o l i t i c a l c r e a t i o n , a r e a c t i o n to North American geography and American expansionism. The separate existence of Canada can be found i n the powerful f a c t o r s of geography and commerce. Geographically the b a s i s of Canada can be found i n the great commercial communication system based on the St. Lawrence waterway. As a student of I n n i s , A. R. M. Lower wrote: The St. Lawrence and the lakes s t r i k e westward l i k e a dagger i n t o the heart of the co n t i n e n t . I t i s along t h i s east-west geographical a x i s that s e t t l e -ment has proceeded, and to the head of the l a k e s , now as i n the f u r - t r a d i n g days, the products of the i n t e r i o r d r a i n down: then they descend the lakes and cross the ocean. That gives a geographical backbone to Canada. Canada g e o g r a p h i c a l l y and h i s tor ica l ly i s the h i n t e r l a n d of the St. Lawrence sea-gate. Economically the b a s i s of Canada can be found i n the production of s t a p l e products: f u r , f i s h , lumber, wheat, miner a l s . "Canada remained Harold I n n i s , The Fur Trade i n Canada (Toronto, U n i v e r s i t y of Toronto Press, 1970 (1930), p. 393. 26 A. R. M. Lower, "Geographical Determinants i n Canadian H i s t o r y " , i n R. F l e n l e y (ed.), Essays i n Canadian H i s t o r y (Toronto, MacMillan, 1939), p. 244-45. For a d e t a i l e d development of t h i s t h e s i s , see, Donald Creighton, The Empire of the St. Lawrence (Toronto, 1956). 21 B r i t i s h i n s p i t e of f r e e trade and c h i e f l y because she continued as an 27 exporter of s t a p l e s to a p r o g r e s s i v e l y i n d u s t r i a l i z e d mother country". The commercial system of the St. Lawrence channelled the s t a p l e pro-ducts of the i n t e r i o r to the coast, and then on to England where they were exchanged f o r manufactured products. The P a c i f i c Northwest has an important maritime h i s t o r y of i t s own, but what secured B r i t i s h Colum-b i a ' s connection w i t h Canada and England was the great c o n t i n e n t a l f u r -t r a d i n g o r g a n i z a t i o n that was developed f i r s t by the Northwest Company, operating out of Montreal, and l a t e r , taken over by the Hudson's Bay Company. As I n n i s wrote: "Canada emerged as a p o l i t i c a l e n t i t y w i t h boundaries l a r g e l y determined by the f u r trade...The s i g n i f i c a n c e of the 28 f u r trade c o n s i s t e d i n i t s determination of the geographic framework". "The f u r trade not only l a i d down our p o l i t i c a l boundaries", however, "but was b a s i c to our connections w i t h England. The f a c t that the trade was prosecuted throughout the northern h a l f of North America, l a r g e l y under one c o n t r o l , was r e s p o n s i b l e f o r the establishment and maintenance 29 of B r i t i s h connections". The metropolitanism, as ex e m p l i f i e d i n the "Laurentian School" of In n i s and Creighton, i s r e a l l y j u s t the opposite side of the c o i n to environmentalism. Instead of the western f r o n t i e r r e a c t i n g on the East, i t i s the East that i n f l u e n c e d , and i n e f f e c t , c o n t r o l l e d and determined 27 I n n i s , The Fur Trade i n Canada, p. 385. I b i d . , p. 393. Harold I n n i s , Essays i n Canadian Economic H i s t o r y (edited by Mary Q. I n n i s , Toronto, U n i v e r s i t y of Toronto Press, 1956), p. 13. 22 the development of the West. But i n terms of such an e s s e n t i a l p o i n t as the c a u s a l i t y of the economy and/or environment, metropolitanism i s based on the same problematic as environmentalism. The metropolitanism of I n n i s and Creighton emphasizes economic f a c t o r s , e s p e c i a l l y the production of s t a p l e products, f o r i t i s t h i s type of economic a c t i v i t y that accounts f o r Canada's p a r t i c u l a r type of economic development and f o r her continued connection w i t h Great B r i t a i n . I n n i s wrote: ...the energy i n the Colony was drawn i n t o the pro-du c t i o n of the s t a p l e commodity both d i r e c t l y and i n -d i r e c t l y . P o p u l a t i o n was involved d i r e c t l y i n the production of the s t a p l e and i n d i r e c t l y i n the f a c i l i -t i e s promoting production. A g r i c u l t u r e , i n d u s t r y , t r a n s p o r t a t i o n , t r a d e , f i n a n c e , and governmental a c t i -v i t i e s tend to become subordinate to the production of the staple^gor a more h i g h l y s p e c i a l i z e d manufacturing community. In other words, s o c i a l s t r u c t u r e s are a l l reduced to the economy, to the production of s t a p l e s ; but, i n t u r n , the economy i s i t s e l f reduced, through technique, to a f u n c t i o n of the adaptation to the environment (geography). Canada's dependence on Europe i s reduced to geography and 31 the s p e c i f i c type of t r a n s p o r t a t i o n that was adapted to f i t i t . Can-ada's p a r t i c u l a r type of economic development - T~her dependence on s t a p l e commodities i s the r e s u l t of the geography of North America, s p e c i -f i c a l l y the network of waterways based on the St. Lawrence and the v a r i o u s techniques developed to harness such a system: the canoe, the York barge, the c a n a l , the steamboat, and l a t e r the r a i l w a y , p a r a l l e l i n g I n n i s , The Fur Trade i n Canada, p. 385. see I n n i s , " T r a n s p o r t a t i o n as a Factor i n Canadian Economic H i s t o r y " , i n Essays i n Canadian Economic H i s t o r y , pp. 62-77. 23 the east-west a x i s of the waterway. The waterways of Canada held "a p o s i t i o n of dominant importance i n the moulding of types of economic 32 and p o l i t i c a l s t r u c t u r e s " . This was because "cheap water t r a n s p o r t a -t i o n favoured the r a p i d e x p l o i t a t i o n of s t a p l e s and dependence on more 33 h i g h l y i n d u s t r i a l i z e d c o u n t r i e s f o r f i n i s h e d products". European \ technology a c t i n g on the Canadian environment produced our economic and s o c i a l system. Confederation i t s e l f was u l t i m a t e l y the r e s u l t of tech-nology (the r a i l w a y ) . As Donald Creighton wrote i n h i s study of the f o r c e s behind Confederation: The economic f a c t o r s i n the Confederation movement were rooted i n the new economy of steam and machines and r a i l -ways. The new age gave the people of B r i t i s h North America novel a s p i r a t i o n s and novel methods by which they might be a t t a i n e d ; and of a l l the dynamic agencies f o r m a t e r i a l conques^and p o l i t i c a l expansion, the m i g h t i e s t was the r a i l w a y . The metropolitanism of I n n i s and Creighton gives a great d e a l of primacy to economic f a c t o r s i n the economic and s o c i a l development of Canada. But when we examine what they mean by the "economy" we d i s -cover that t h e i r approach, when i t t r i e s to become a general theory of s o c i a l l i f e and h i s t o r y , r e l i e s on the tenents of " v u l g a r " m a t e r i a l i s m . A l l s o c i a l s t r u c t u r e s are reduced, i n an epiphenomenal f a s h i o n , to the economy, which i s i t s e l f reduced to a r e l a t i o n between man and nature; Harold I n n i s , Problems of Staple Production i n Canada (Toronto, Ryerson, 1933), p. 5. (my emphasis). 33 I b i d . , p. 14 . Donald Creighton, " B r i t i s h North America At Confederation", Report of the Commission on l ) o m i n i o n - P r o v i n c i a l R e l a t i o n s (Ottawa, 1939), Appendix 2, p. 59. 24 and as we have seen, i t i s technology and the environment that i s the u l t i m a t e l y determining f a c t o r . There i s no doubt that the economic a p p l i c a t i o n of t e c h n i c a l knowledge and net investment i n productive f a c i l i t i e s were of prime im-portance i n the economic growth of today's advanced c a p i t a l i s t count-t i e s . But there i s a l s o l i t t l e doubt that the necessary s o c i o -economic c o n d i t i o n s had to be present f o r the l a r g e net investment i n new, t e c h n o l o g i c a l l y p r o g r e s s i v e productive f a c i l i t i e s to take p l a c e . As Paul Baran w r i t e s : "In the Ancient World as i n the Middle Ages there were many ingenious t e c h n i c a l devices that were not u t i l i z e d because 35 the socio-economic c o n d i t i o n s f o r t h e i r r e a l i z a t i o n were l a c k i n g " . The s o - c a l l e d I n d u s t r i a l R e v o l u t i o n i n England and the r i s e of i n d u s t -r i a l c a p i t a l i s m was not p u r e l y the r e s u l t of the i n t r o d u c t i o n of auto-matic devices i n t o production. I t r a t h e r i n v o l v e d a complete t r a n s f o r -mation of the r o l e played by the c a p i t a l i s t e n t e r p r i s e r . In England the process of economic development along c a p i t a l i s t l i n e s had i t s r o o t s as f a r back as the s i x t e e n t h century. The development of the pre-c o n d i t i o n s of i n d u s t r i a l c a p i t a l i s m i n v o l v e d a process that Marx c a l l e d 3 6 " p r i m i t i v e accumulation". C a p i t a l i s t production presupposed both the emergence of an i n d u s t r i a l c a p i t a l i s t "who was eager to increase the sum of the values they possess, by buying other people's labour 37 power", and the c r e a t i o n of a c l a s s of f r e e l a b o u r e r s , freed from f e u d a l o b l i g a t i o n s and property. In other words, the p r e - c o n d i t i o n s 35 Paul Baran, The P o l i t i c a l Economy of Growth (Middlesex, England: Penquin Books, 1973 (copyright 1957), p. 188. 36 S e e , i K a r l Marx, C a p i t a l (New York, The Modern L i b r a r y E d i t i o n , 1906), Volume I , Part V I I I , pp. 784-849. 37 I b i d . , p. 737. 25 f o r the development of c a p i t a l i s m i n v o l v e d nothing l e s s than the complete transformation of the s o c i a l s t r u c t u r e . I n d u s t r i a l c a p i t a l -ism, i n England, came i n t o f u l l m a t urity i n the per i o d 1775-1815; and i t was ass o c i a t e d w i t h the r a p i d r i s e of a new c l a s s l e a d e r s h i p ; a c l a s s l e a d e r s h i p l i n k e d w i t h i n d u s t r y , w i t h i n d u s t r i a l c a p i t a l , and not l a n d l o r d i s m or commerce. E n g l i s h i n d u s t r i a l c a p i t a l i s m was able to make massive s t r i d e s forward due to many other f a c t o r s besides the appearance of i n d u s t r i a l i n v e n t i o n s . Among these were: the maintenance of c i v i l peace; a p o l i t i c a l and j u d i c i a l apparatus capable of defending property r i g h t s ; an ever growing labour supply thanks to the renewal and completion of the processes of enclosure; a widening and i n t e g r a -t i o n of the domestic market as a r e s u l t of the p u b l i c and p r i v a t e con-s t r u c t i o n of roads and canals; a growing f o r e i g n market i n Europe and overseas; and the e x t r a o r d i n a r y c r e d i t expansion a s s o c i a t e d w i t h the governmental f i n a n c i n g of the Napoleonic Wars. The point that I am t r y i n g to make i s that the u l t i m a t e b a s i s f o r the tr a n s f o r m a t i o n of a system cannot be found i n technology or geo-graphy, but r a t h e r i n the s o c i a l r e l a t i o n s of production ( i . e . , c l a s s r e l a t i o n s ) that men form i n the production of t h e i r m a t e r i a l e x i s t e n c e . H i s t o r y i s not the r e s u l t of technology or geography; i t cannot be reduced to men's encounter w i t h the environment. Nor i s h i s t o r y the r e -s u l t of a subject who makes h i s t o r y . Men's i n t e n t i o n a l a c t i v i t y i s of course a " r e a l i t y " that cannot be ignored, but of much more importance i n the understanding of the f u n c t i o n i n g and genesis of a system are the u n i n t e n t i o n a l p r o p e r t i e s inherent i n the economic s t r u c t u r e and s o c i a l r e l a t i o n s . 26 (D) B r i t i s h Columbia and M e t r o p o l i t a n i s m 38 Margaret Ormsby's comprehensive h i s t o r y of B r i t i s h Columbia was based on the v a l u a b l e m a t e r i a l brought f o r t h by the work of the B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y (1938-1958). In her book, Ormsby attempted to balance the c o n t i n e n t a l and maritime i n f l u e n c e s , but w i t h a much more e x p l i c i t r e c o g n i t i o n of the e f f e c t of m e t r o p o l i -tan f o r c e s . While speaking of James Douglas and other c o l o n i a l o f f i -c i a l s where necessary, she took i n t o c o n s i d e r a t i o n the commercial p o s i t i o n of V i c t o r i a v i s - a - v i s London and San F r a n c i s c o , as w e l l as l o o k i n g at the r e l a t i o n of V i c t o r i a to i t s own s a t e l l i t e , New Westmini-s t e r , and the c o n f l i c t that was c o n s t a n t l y s u r f a c i n g between the two c i t i e s . But most i m p o r t a n t l y , Ormsby was one of the f i r s t to challenge at l e a s t i m p l i c i t l y the assumption that the s u r v i v a l of B r i t i s h Columbia as a province of Canada was p r i m a r i l y the r e s u l t of the a c t i -v i t y of a cadre of o f f i c i a l s and bureaucrats; she gave a much more 39 prominent p o s i t i o n to commercial and business f a c t o r s . I t was not u n t i l the l a t e 1860s, however, that h i s t o r i a n s began to examine i n a J O B r i t i s h Columbia: A H i s t o r y (Toronto, MacMillan, 1958). 39 "The f u t u r e of the Colony was a matter of utmost concern to E n g l i s h c a p i t a l i s t s who had invested money i n the timber lands of A l b e r n i Canal and Burrard I n l e t , i n the c o a l f i e l d s of Nanaimo and the Queen C h a r l o t t e I s l a n d s , i n merchandising business and commission agencies i n V i c t o r i a and i n the bonds of the c o l o n i a l government. I b i d . , p. 236. "The suggestion of the C o l o n i a l O f f i c e that Canada might assume the f i n a n c i a l and m i l i t a r y r e s p o n s i b i l i t y f o r B r i t i s h Columbia was not unwelcome at Ottawa, where the n a t i o n a l ambitions of the new government, and of the business i n t e r e s t s which supported i t , extended to the outer l i m i t s of the continent". I b i d . "The Scots and I r i s h who, l i k e the Canadians, had been at the mercy of E n g l i s h bankers i n V i c t o r i a and of an E n g l i s h finance company which advanced money at r a t e s of 12 and 18 per cent, tended to support the movement f o r union". I b i d . , pp. 241-242. 27 d e t a i l e d manner the assumption that economic power In the Colony- wa.s-the s o l e domain of the Americans-. The maintenance of p o l i t i c a l power by the B r i t i s h was not the o n l y reason f o r B r i t i s h . Columbia's e n t r y i n t o Confederation; there were more fundamental forces- at work. In the winter of 1968, K e i t h R a l s t o n , who set out to examine the. assumption that C a l i f o r n i a was the metropolis of the. P a c i f i c Norths west, concluded: \ The development of the B r i t i s h . Columbia salmon canning i n d u s t r y does not... support the hypothesis that ref-l a t i o n s between San F r a n c i s c o and B r i t i s h . Columbia i n the years 18^7-92 were simply those of metropolis and h i n t e r l a n d . In f a c t , there e x i s t e d a " t r i a n g l e of t r a d e " f o r both. San F r a n c i s c o and V i c t o r i a : "...the t r i a n g l e of trade i n v o l v e d d i r e c t and independent l i n k s w i t h Great B r i t a i n , as w e l l as cross-connections with. each, other . J . M. S. Careless followed Ralston's work w i t h a study of the Lowe Brothers, two pre-confederation V i c t o r i a merchants. In the summer of 1969, Careless wrote: ...the careers of the Lowe brothers suggest that a view of San F r a n c i s c o dominance over much of B r i t i s h Columbia's e a r l i e r c o a s t a l development r e q u i r e s a wider p e r s p e c t i v e , f o r beside or behind the l i n e s of growth spreading from the C a l i f o r n i a m e tropolis older B r i t i s h m e t r o p o l i t a n forces were s t i l l s i g n i f i c a n t l y at work i n the h i n t e r l a n d . 40 K e i t h R a l s t o n , "Patterns of Trade and Investment on the P a c i f i c Coast, 1867-1892: The Case of the B.C. Salmon Canning I n -d u s t r y " , B.C. Studies no. 1 (winter, 1968-69), p. 43. 41 I b i d . , p. 45. 42 J . M. S. C a r e l e s s , "The Lowe Brothers, 1850-1870: A Study i n Business R e l a t i o n s on the North P a c i f i c Coast", B.C. Studies no. 2 (summer, 1969), p. 18. 28 And i n another a r t i c l e , Careless demonstrated that a strong B r i t i s h i n f l u e n c e o f f s e t the i n f l u e n c e of San Francisco not only i n p o l i t i c s , but a l s o i n " c a p i t a l investment, business personnel and the very d e a l -ings w i t h major fi r m s i n San F r a n c i s c o that were themselves part of a 43 London-Liverpool and Glasgow m e t r o p o l i t a n network". Thus, the suggestion that f o l l o w s from t h i s work i s that there were important economic f o r c e s behind B r i t i s h Columbia's entry i n t o the Canadian Federation. V i c t o r i a was part of a l a r g e r m e t r o p o l i t a n net-work; a network that t i e d the Colony not only p o l i t i c a l l y and c o n s t i -t u t i o n a l l y , but a l s o economically, to Great B r i t a i n , and u l t i m a t e l y to Canada. The problems w i t h metropolitanism as i t has developed i n r e l a t i o n to B r i t i s h Columbia h i s t o r y , however, are two-fold. F i r s t l y , i t r e l i e s on the tenents of e m p i r i c a l m a t e r i a l i s m and has remained p r i m a r i l y de- s c r i p t i v e . And secondly, i t refuses to acknowledge e x p l i c i t l y the b a s i c i m p l i c a t i o n of the approach: namely, an i m p e r i a l i s m of the metro-p o l i t a n center.. D e s c r i p t i o n i s o b v i o u sly a f i r s t step toward the development of theory, and the work of Ormsby, Ralston and Careless have provided use-f u l i n f o r m a t i o n and i n s i g h t s by searching out the more b a s i c (and o f t e n hidden) patterns of trade and communications. But what t h i s approach f a i l s to do, however, i s to go beyond the mere examination of surface phenomena. I t f a i l s to b r i n g to l i g h t the more fundamental s t r u c t u r e s J . M. S. C a r e l e s s , "The Business Community i n the E a r l y Develop-ment of V i c t o r i a , B r i t i s h Columbia", i n D. S. Macmillan ( e d i t o r ) , Canadian Business H i s t o r y (Toronto, MacMillan, 1971), p. 122. 29 that shape and determine e m p i r i c a l r e a l i t y . What i s needed i s a more h o l i s t i c s t r u c t u r a l and h i s t o r i c a l approach. An approach that does not, when i t attempts to become a general theory of s o c i e t y and h i s -t o r y , lapse i n t o a naive geographical or t e c h n o l o g i c a l determinism. The p o i n t that I am t r y i n g to make i s that metropolitanism, w h i l e pro-v i d i n g u s e f u l i n s i g h t s at the d e s c r i p t i v e l e v e l , must be placed w i t h i n a l a r g e r and more s o p h i s t i c a t e d t h e o r e t i c a l framework. A framework that views the development of c a p i t a l i s m from a h i s t o r i c a l and s t r u c -t u r a l p e r s p e c t i v e . The second point to be made i s that the metropolitanism of these h i s t o r i a n s of B r i t i s h Columbia refuse to e x p l i c i t l y recognize the economic i m p e r i a l i s m of the m e t r o p o l i t a n center. B r i t i s h Columbia's entry i n t o Confederation occurred w i t h i n the t o t a l framework of c a p i t a -l i s t expansion i n the nineteenth century. I t occurred w i t h i n the con-t e x t of B r i t i s h i m p e r i a l i s m . In order to adequately understand the socio-economic development of the Colony the nature and character of B r i t i s h i m p e r i a l i s m i n the P a c i f i c Northwest must be thoroughly exa-mined. This point i s f u r t h e r developed i n the next chapter (chapter I I I ) . (E) Conclusion I f the " i n t e n t i o n a l a c t i v i t y " school (idealism) and environmenta-l i s m are r e j e c t e d as the b a s i s f o r the transformation of a s o c i a l form-a t i o n , what other aspect of the human-nature system may be considered as the d r i v i n g f o r c e behind h i s t o r y ? One answer to t h i s question was put f o r t h i n the m a t e r i a l i s t conception of h i s t o r y as developed by Marx and Engels: The u l t i m a t e b a s i s of the transformation of a system are found 30 i n the u n i n t e n t i o n a l s o c i a l s t r u c t u r e s that are created when men form s o c i a l r e l a t i o n s among themselves i n order to c a r r y out the production of t h e i r m a t e r i a l c o n d i t i o n s of ex i s t e n c e . As F r i e d r i c h Engels wrote: "...according to the m a t e r i a l i s t conception of h i s t o r y , the u l t i m a t e l y determining element i n h i s t o r y i s the production and reproduction of r e a l l i f e " . ^ The key word i n the above quotation i s " u l t i m a t e l y " . I t i s the transformations that take place i n the economy, i n the mater-i a l c o n d i t i o n s of production, that determine, i n the l a s t i n s t a n c e , the corresponding s o c i a l and p o l i t i c a l s t r u c t u r e s . As Engels went on to say: More than t h i s n e i t h e r Marx nor I has ever a s s e r t e d . Hence i f somebody t w i s t s t h i s i n t o saying that the economic element i s the only determining one he t r a n s -forms that p r o p o s i t i o n i n t o a meaningless, a b s t r a c t , senseless phrase. The economic s i t u a t i o n i s the b a s i s , but the v a r i o u s elements of the s u p e r s t r u c t u r e . . . a l s o e x e r c i s e t h e i r i n f l u e n c e upon the course of the h i s t o r i -c a l s t r u g g l e s and i n many cases preponderate i n d e t e r -mining t h e i r form...We make our h i s t o r y o u r s e l v e s , but, i n the f i r s t p l a c e , under very d e f i n i t e assumptions and c o n d i t i o n s . Among these the economic ones are u l t i m a t e l y d e c i s i v e . But the p o l i t i c a l ones, e t c . , and indeed even the t r a d i t i o n s which haunt human minds a l s o p l a y a p a r t y , although not a d e c i s i v e one. I t i s t h i s p e r s p e c t i v e that w i l l be taken i n t h i s . t h e s i s . Engels, "Engels to Joseph Bloch (1890)", i n Lewis S. Feuer (ed.), Basic W r i t i n g s on P o l i t i c s and Philosophy: E a r l Marx and F r i e d r i c h Engels (Garden C i t y , New York, Doubleday & Co., 1959), pp. 397-398. 4 5 I b i d . , p. 398. 31 I I I THE STRUCTURE OF .BRITISH IMPERIALISM  (A-)' I n t r o d u c t i o n Our i n q u i r y i n t o the o r i g i n s of B r i t i s h Columbia's entry i n t o Con-f e d e r a t i o n i s based on the method of p o l i t i c a l economy. This method concentrates on the s t r u c t u r e s of c a p i t a l and on the nature of the domi-nant c l a s s , the c a p i t a l i s t c l a s s . The economic s t r u c t u r e and c l a s s r e -l a t i o n s of c o l o n i a l B r i t i s h Columbia, however, d i d not e x i s t by them-s e l v e s ; the region d i d not develop i n i s o l a t i o n . B r i t i s h Columbia's entry i n t o Confederation was a h i s t o r i c a l product of  the r e l a t i o n between the dominant m e t r o p o l i t a n centers and the Colony; i t occurred w i t h i n the t o t a l framework of c a p i t a l i s t development i n the  nineteenth century. Throughout the pre-Confederation p e r i o d , the Colony was economi-c a l l y and p o l i t i c a l l y dominated by Great B r i t a i n . The Northwest P a c i f i c Coast was an underdeveloped, h i n t e r l a n d r e g i o n e f f e c t i v e l y c o n t r o l l e d from without. The nature of t h i s c o n t r o l must be examined, and i n order to do so, we must take i n t o account the unique h i s t o r i c a l and s t r u c t u r a l circumstances surrounding the r e l a t i v e stages of economic development i n not only the h i n t e r l a n d r e g i o n but a l s o i n the metropole. C o l o n i a l i s m , as R. T. Naylor s a i d , cannot be explained by t e c h n o l o g i c a l or geographical determinism or by "comparative advantage", but only by reference to the r e l a t i v e stages of c a p i -t a l i s t development achieved by both the metropole and the h i n t e r l a n d . The metropole d e f i n e s the character and extent of economic development i n the h i n t e r l a n d area. Moreover, the s t r u c t u r a l r e l a t i o n -ship between the Colony and the^metropole n e c e s s a r i l y change as the metropole a l t e r s . Naylor, "The Rise and F a l l of the T h i r d Commercial Empire of the St. Lawrence", i n G. Teeple (ed.), C a p i t a l i s m and the N a t i o n a l  Question i n Canada (Toronto, U n i v e r s i t y of Toronto P r e s s , 1972), p. 2. 32 The s t r u c t u r a l r e l a t i o n s h i p between the P a c i f i c Northwest and B r i t a i n must be sketched out i n order to adequately examine and e x p l a i n the f o r c e s behind B r i t i s h Columbia's entry i n t o Confederation. A b a s i c theme of t h i s t h e s i s i s that the road to Confederation f o r the Colony of B r i t i s h Columbia was e s s e n t i a l l y determined or p a r a l l e l e d by a s h i f t i n Great B r i t a i n from merchant c a p i t a l i s m to i n d u s t r i a l c a p i t a l i s m , and thus, i n the transformation of the nature and character of B r i t i s h i m p e r i a l i s m . This s h i f t i n the economic s t r u c t u r e of the B r i t i s h m e t ropolis was a l s o r e f l e c t e d i n developments i n Canada. The road to Confederation f o r Canada, as f o r B r i t i s h Columbia, can be i n t e r -^ p r e t e d at a fundamental, s t r u c t u r a l l e v e l as a process of r e a d j u s t -ment to the changed r e l a t i o n s of production i n the metropole. Monopoly and the Hudson's Bay Company r e f l e c t e d the era of merchant c a p i t a l i s m , the era of m e r c a n t i l i s m , and the l a r g e B r i t i s h i m p e r i a l banks of the nineteenth century r e f l e c t e d the era of i n d u s t r i a l c a p i t a l i s m . The theme of the s h i f t from m e r c a n t i l i s m to the " i m p e r i a l i s m of f r e e trade" w i l l be developed throughout the t h e s i s . In t h i s chapter, i m p e r i a l i s m w i l l be d e f i n e d , and the nature of merchant and i n d u s t r i a l c a p i t a l i s m , and the character of B r i t i s h overseas expansion a s s o c i a t e d w i t h each phase, w i l l be examined. The object of t h i s chapter i s to prepare the reader f o r a b e t t e r understanding of t h i s theme. 33 (B) Imperialism: A D e f i n i t i o n The p e r i o d of 1815 to 1870, according to one i n t e r p r e t a t i o n of the 2 h i s t o r y of the B r i t i s h Empire, marked the era of " L i t t l e Englandism". I t represented the f i f t y - o d d years between the m e r c a n t i l i s t i m p e r i a l i s m of the eighteenth century and the "neo-imperialism" of the l a t e V i c t o r i a n Age. A f t e r Waterloo the o l d m e r c a n t i l i s t system was r a p i d l y dismantled and f r e e - t r a d e , l a i s s e z - f a i r e and a n t i - c o l o n i a l i s m rose to a p o s i t i o n of dominance. I t was an i n t e r l u d e of peace and p r o s p e r i t y ; and most s i g n i f i c a n t l y , i t was an age of a n t i - i m p e r i a l i s m . The formal empire was the only t e s t of i m p e r i a l a c t i v i t y , and, w i t h i t s d i s i n t e -g r a t i o n , i m p e r i a l i s m vanished. The problem w i t h t h i s i n t e r p r e t a t i o n , however, i s that i t does not f i t the f a c t s . I t tends to d i s t i n g u i s h between the formal and i n f o r m a l aspects of empire, and to define i m p e r i a l i s m as a p o l i t i c a l phenomena. I t d i s a s s o c i a t e s c a p i t a l i s m and i m p e r i a l i s m and assumes that formal, c o n s t i t u t i o n a l independence precludes the existence of e x p l o i t i v e econo-mic r e l a t i o n s . In other words, the c o l o n i a l r e l a t i o n s h i p i s p o l i t i c a l and not economic. Such an i n t e r p r e t a t i o n i s based on a l e g a l i s t i c , f o r -mal n o t i o n of i m p e r i a l i s m which j u s t does not hold up under c l o s e r s c r u t i n y . From the e a r l y 1950s onwards, s c h o l a r s began to challenge the above view. In 1953 John Gallagher and Ronald Robinson wrote i n an i n f l u e n t i a l essay: For t h i s o l d e r view see, C. A. Bodelsen, Studies i n M i d - V i c t o r i a n  Imperialism (Copenhagen, 1924); A. P. Newton, A. Hundred Years of the  B r i t i s h Empire (London, 1942); R. L. Schuyler, The F a l l of the Old  C o l o n i a l System: A Study of B r i t i s h Free Trade, 1770-1870 (New York,1945). For a short d i s c u s s i o n of t h i s l i t e r a t u r e see, C. C. E l d r i d g e , Englands M i s s i o n : The I m p e r i a l Idea i n the Age of Gladstone and  D i s r a e l i , 1868-1880 (London, 1973), chapter I . 34 Far from being an era of ' i n d i f f e r e n c e ' , the mid-V i c t o r i a n years were the d e c i s i v e stage i n the h i s t o r y of B r i t i s h expansion overseas, i n that the combination of commercial p e n e t r a t i o n and p o l i t i c a l i n f l u e n c e allowed the United Kingdom to command those economies which could be made to f i t best i n t o her own. In the e a r l y 1960s, John S. G a l b r a i t h , f o l l o w i n g the work i n t h i s area, concluded that "...there i s no evidence to support the assumption that d o c t r i n a i r e ' L i t t l e Englandism' was ever i n f l u e n t i a l i n e i t h e r P a r l i a -ment or the Cabinet". And as G a l b r a i t h went on to say: The myth of the ' L i t t l e England' era l a r g e l y a r i s e s from a preoccupation w i t h the empire i n a s t r i c t l y p o l i t i c a l sense and a f a i l u r e to recognize the im-portance of what has been c a l l e d the 'informal empire' of trade and investment (Gallagher and Robinson). The e a r l y V i c t o r i a n s were i n d i f f e r e n t or h o s t i l e to the extension of formal Empire because p o l i t i c a l c o n t r o l i n v o l v e d c o s t l y a d m i n i s t r a t i o n and even more c o s t l y r e s p o n s i b i l i t y f o r defense. I t was much to be pre-f e r r e d that the c o n d i t i o n s r e q u i s i t e f o r trade and ^ investment should be maintained without such expense. The "myth of L i t t l e Englandism" and a n t i - i m p e r i a l I s m completely d i s i n t e g r a t e s i f the t o t a l framework of c a p i t a l i s t expansion i n the nineteenth century i s taken i n t o c o n s i d e r a t i o n . The new i d e o l o g i c a l conceptions a s s o c i a t e d w i t h the i n d u s t r i a l c a p i t a l i s m of the nineteenth century masked the e s s e n t i a l c o n t i n u i t y of p o l i c y throughout the p e r i o d . B r i t a i n could a f f o r d to f o s t e r f r e e - t r a d e because her i n d u s t r y was c l e a r l y i n a p o s i t i o n of competitive advantage; i n d u s t r i a l production John Gallagher & Ronald Robinson, "The Imperialism of Free Trade", The Economic H i s t o r y Review, Second S e r i e s , V o l . VI, no. 1 (1953), p. 11. 4 John S. G a l b r a i t h , "The Myth of the ' L i t t l e England' Era", i n A. G. L. Shaw (ed.), Great B r i t a i n and the C o l o n i e s , 1815-1865 (London, Methuen & Co., 1970), p. 34. was paramount, and a l l e l s e seemed superfluous. But t h i s does not a l t e r the f a c t that B r i t i s h s o c i e t y was expanding, expanding i n both a formal and i n f o r m a l sense. The annexation of New Zealand i n 1840 or of N a t a l i n 1843; the Sikh campaigns of 1845 and 1848; the massive exports of c a p i t a l and manufactures; the m i g r a t i o n of c i t i z e n s , langu-age, and c o n s t i t u t i o n a l forms; the securing of guarantees of f r e e trade and access to markets; and the g r a n t i n g of a c h a r t e r to a p r i v a t e mono-p o l i s t i c company to administer and finance a new r e g i o n as i n the case of Vancouver I s l a n d are a l l part of the same process of an expanding i n d u s t r i a l economy. The p o i n t i s that i f i m p e r i a l i s m i s simply defined as a p o l i t i c a l phenomena i t misses the important d i s t i n c t i o n between the formal and the i n f o r m a l methods of c o n t r o l and expansion. The " m e r c a n t i l i s t use Cf. Marx, "England: The C h a r t i s t s " , New York D a i l y Tribune, August 25, 1852, c i t e d i n P. Dutt, The C r i s i s of B r i t a i n i n the  B r i t i s h Empire (London, 1953), p. 74; "The Free Traders (the men of the Manchester School, the Parliamentary and F i n a n c i a l Reformers) are the o f f i c i a l r e p r e s e n t a t i v e s of modern E n g l i s h s o c i e t y , the representa-t i v e s of that England which r u l e s the markets of the world... The s t r u g g l e of t h i s part against the o l d E n g l i s h i n s t i t u t i o n s , products of a superannuated, and evanescent stage of s o c i a l development, i s resumed i n the watchword: Produce as cheap as you can, and do away  w i t h a l l the faux f r a i s of production (with a l l superfluous, unneces-sary expenses i n production)....The n a t i o n can produce and exchange without r o y a l t y ; away w i t h the Crown. The sinecures of the n o b i l i t y , the House of Lords? Faux f r a i s of production. The l a r g e standing Army? Faux f r a i s of p r o d u c t i o n . . . . N a t i o n a l Wars? Faux f r a i s of pro-d u c t i o n . England can e x p l o i t nations more cheaply w h i l e at peace w i t h them". 36 of power to o b t a i n commercial supremacy and monopoly through p o l i t i c a l p ossession" or the " i m p e r i a l i s m of f r e e t r a d e " which i s content to " l i m i t the use of paramount power to e s t a b l i s h i n g s e c u r i t y of trade" are simply v a r i a b l e p o l i t i c a l f u n c t i o n s of an expanding i n d u s t r i a l i z e d B r i t i s h s o c i e t y . ^ Imperialism can be d e f i n e d , as Gallagher and Robin-son do, "as a s u f f i c i e n t p o l i t i c a l f u n c t i o n of t h i s process of i n t e g -r a t i n g new regions i n t o the expanding economy". 7 Economic i m p e r i a l i s m , as a more recent commentator has argued, i s the "economic domination of one r e g i o n or country over another s p e c i f i c a l l y , the formal or i n -formal c o n t r o l over l o c a l economic ..resources i n a manner advantageous 8 to the m e t r o p o l i t a n power, and at the expense of the l o c a l economy". Economic c o n t r o l assumes d i f f e r e n t forms and i s e x e r c i s e d i n d i f f e r e n t ways depending on the circumstances of the r e g i o n of i n t e r e s t . L. H. Jenks w r i t e s : My conception of "economic i m p e r i a l i s m " i n v o l v e s more than v i t a l dependence. I t means c o n t r o l from without. I t means conscious d i r e c t i o n , how-ever b l u n d e r i n g , however ignorant of i t s own s o c i a l s i g n i f i c a n c e . Moreover i t means c o n t r o l of any d i r e c t i v e k i n d , whether economic or p o l i t i c a l , whether t h r u the pressure of a navy or t h r u the pur-posive employment of a discount or exchange r a t e , whether thru a r e s t r i c t i o n upon loans or as exerted upon i s o l a t e d u n i t s of a country's economic l i f e thru the d e c i s i o n s of a l i e n companies operating w i t h i n i t s f r o n t i e r s . Where these companies c o n t r o l an e s s e n t i a l Gallagher & Robinson, "The Imperialism of Free Trade", op. c i t . , p. 6. 7 I b i d . James O'Connor, "The Meaning of Economic Imperialism", i n Robert Rhodes (ed.), Imperialism and Underdevelopment (New York, Monthly Review Press, 1970), p. 118. 37 i n d u s t r y , e i t h e r as to market, output, or pro-d u c t i o n , where they dominate the s o c i a l l i f e of a community, economic i m p e r i a l i s m c e r t a i n l y e x i s t s whether i t bears a s i n i s t e r connotation, threatening a disturbance or the world's peace, or not. Underlying the d i v e r s e forms and methods i s the b a s i c p r i n c i p l e of extending c o n t r o l . A p r i n c i p l e that can be summed up i n the f o l l o w i n g statement: "Trade w i t h i n f o r m a l c o n t r o l i f p o s s i b l e ; trade w i t h r u l e .* ..10 xf necessary . (C) Merchant C a p i t a l i s m & I n d u s t r i a l C a p i t a l i s m Economic h i s t o r i a n s who have studied the development of c a p i t a l -ism"'""'" have i d e n t i f i e d merchant and i n d u s t r i a l c a p i t a l i s m as two d i s -t i n c t stages i n the growth of c a p i t a l i s m . There are s i g n i f i c a n t d i f f e r e n c e s between merchant and i n d u s t r i a l c a p i t a l i s m i n terms of e s s e n t i a l economic s t r u c t u r e s . The main a c t i v i t y a s s o c i a t e d w i t h mer-chant c a p i t a l i s m i s the c i r c u l a t i o n of goods and s e r v i c e s , whereas i n -d u s t r i a l c a p i t a l i s m i s a s s o c i a t e d w i t h the production of goods. In a mode of production dominated by merchant c a p i t a l , p r o f i t comes mainly from s p e c u l a t i o n i n time and space and e x t o r t i o n ( i . e . , the c o l o n i a l 9 Leland Hamilton Jenks, The M i g r a t i o n of B r i t i s h C a p i t a l to  1875 (London, Thomas Nelson & Sons, 1963 (1927), p. 197. Gallagher & Robinson, "The Imperialism of Free Trade", op. c i t . , p. 13. see, f o r example, Maurice Dobb, Studies i n the Development of  C a p i t a l i s m , r e v i s e d edition_(New York, I n t e r n a t i o n a l P u b l i s h e r s , 1963); O l i v e r Cox, The Foundations of C a p i t a l i s m (London, Peter Owen, L t d . , 1959). system). Under i n d u s t r i a l c a p i t a l i s m , on the other hand, s u r p l u s -value i s generated by the e x p l o i t a t i o n of su r p l u s - l a b o u r . C a p i t a l i s any value which i s increased by a su r p l u s - v a l u e , and i t i s o l d e r than i n d u s t r i a l c a p i t a l i s m (e.g., usury c a p i t a l ) . But i t i s only i n i n d u s t -r i a l c a p i t a l i s m that c a p i t a l a c t u a l l y penetrates the sphere of produc-t i o n and produces s u r p l u s - v a l u e , i . e . , as opposed simply to the r e d i s - t r i b u t i o n of values. As Marx says: Merchant's c a p i t a l i s simply c a p i t a l f u n c t i o n i n g i n the sphere of c i r c u l a t i o n . The process of c i r c u l a t i o n i s a phase of the t o t a l process of r e -production. But no value i s produced i n the process of c i r c u l a t i o n , and, t h e r e f o r e , no surplus v a l u e . Merchant c a p i t a l predominates i n trade and banking. And as h i s t o r i a n s have demonstrated, i t occupied a dominant p o s i t i o n i n Venice i n the 13th century, i n London and P a r i s i n the 16th century, i n B r i s -t o l and L i v e r p o o l i n the 17th century, and i n Boston, New York, P h i l a -d e l p h i a , and Montreal i n the 18th century. Even up u n t i l the mid-19th century, merchant c a p i t a l dominated the business community of New York, and, as a recent w r i t e r has argued, i t continued to dominate the econo-14 mic s t r u c t u r e of Canada up to the 1930s. H i s t o r i c a l l y , merchant Cf. Marx, C a p i t a l , V o l . I l l , ch. xx, p. 331: "Merchant's c a p i -t a l , when i t holds a p o s i t i o n of dominance, stands everywhere f o r a system of robbery, so that i t s development among t r a d i n g nations of o l d and modern times i s always d i r e c t l y connected w i t h p l u n d e r i n g , p i r a c y , kidnapping s l a v e s , and c o l o n i a l conquest". 1 3 I b i d . , p. 279. see, R. T. Naylor, "The Th i r d Commercial Empire of the St. Lawrence", i n Teeple (ed.), C a p i t a l i s m and the N a t i o n a l Question i n  Canada, pp. 1-42. c a p i t a l penetrated manufacturing, but even here, i t continued to func-t i o n i n the sphere of c i r c u l a t i o n . In domestic manufacturing, or the " p u t t i n g - o u t " system, the merchant-manufacturer acted as an i n t e r m e d i -ary; he supplied the raw m a t e r i a l s to the independent a r t i s a n who possessed h i s own means of production ( i . e . , the a r t i s a n was a pro-ducer and not a wage-labourer). The merchant-manufacturer, who had the necessary l i q u i d funds, took the product and s o l d i t ("bought cheap and s o l d dear"). In other words, the main i n t e r e s t of the mer-chant-manufacturer was i n commerce, and not i n production. I n d u s t r i a l c a p i t a l , on the other hand, a c t u a l l y penetrates the sphere of produc-t i o n , and separates the worker from the instruments of production; that i s , the worker s e l l s h i s labour-power f o r wages. Louis Hacker c h a r a c t e r i z e s i n d u s t r i a l manufacture i n the f o l l o w i n g passage: The p r i v a t e and concentrated ownership of the f i x e d c a p i t a l — w o r k s h o p , equipment, t o o l s — t h e h i r i n g of wage l a b o r , gathered together i n f a c -t o r i e s and working under d i s c i p l i n e , and the d i v i -s i o n of labor were i t s primary and unique a t t r i b u t e s . In a secondary sense, i t was d i s t i n g u i s h e d by owner management, r a t i o n a l i z a t i o n of production, the greater c i r c u l a t i o n of c a p i t a l , the more i n t e n s i v e o r g a n i z a -t i o n of the market, and, l a t e r , the i n t r o d u c t i o n of power. Such was the f a c t o r y system t h a t began to supplant the putting-out system i n England i n the middle of the eighteenth century and that became the d i s t i n g u i s h i n g mark of i n d u s t r i a l c a p i t a l i s m . In other words, i n d u s t r i a l c a p i t a l i s m i s based on a p a r t i c u l a r type of o r g a n i z a t i o n and production; and, i t i s associated w i t h the con-c e n t r a t i o n of c a p i t a l and the growth of l a r g e productive undertakings. Louis Hacker, The Triumph of American C a p i t a l i s m (New York, Columbia U n i v e r s i t y P ress, 1947 (1940), p. 138. 40 I n d u s t r i a l c a p i t a l i s m r e q u i r e s l a r g e c a p i t a l investments, i . e . , i n machines and f a c t o r i e s , and such investments are f i x e d and long-term. On the other hand, the c a p i t a l of merchants Is u s u a l l y invested i n land ( s p e c u l a t i o n ) , s h i p s , r a i l w a y s and canals ( c o n t r a c t i n g ) , ware-houses and banks. The main c h a r a c t e r i s t i c of the investments of mer-chants i s that they are short-term; there i s a r a p i d c i r c u l a t i o n of c a p i t a l and the r a t i o of f i x e d to c i r c u l a t i n g c a p i t a l i s very low. At the economic l e v e l , the c o n t r a d i c t i o n between merchant and i n d u s t -r i a l c a p i t a l can be seen i n terms of the mode of u t i l i z a t i o n of the economic s u r p l u s . The more c a p i t a l u t i l i z e d i n the sphere of c i r c u -l a t i o n the l e s s c a p i t a l w i l l be a v a i l a b l e f o r p r oductive e n t e r p r i s e s . M e r c a n t i l e operations r e s t r i c t s the c r e a t i o n s of values by d r a i n i n g o f f l a r g e p a r t s of the economic surplus i n t o unproductive p u r s u i t s , and i t i s t h e r e f o r e a b a r r i e r to the development of i n d u s t r i a l c a p i -16 t a l i s m ( i . e . , i t i s a b a r r i e r when merchant c a p i t a l predominates). To put t h i s d i s c u s s i o n i n h i s t o r i c a l p e r s p e c t i v e , however, i t must be remembered that i n the economic development of England the growth of trade and commerce, and the concomitant growth of c r e d i t i n s t i t u t i o n s , preceded the growth of i n d u s t r i a l c a p i t a l i s m . Merchants (and the f i n a n c i e r s who emerged to s e r v i c e the m e r c a n t i l e operations and the State) accumulated l a r g e amounts of c a p i t a l which were neces-sary f o r i n d u s t r i a l development. In the commercial towns the mer-chants formed an a r i s t o c r a c y of s o r t s , and, they g r a d u a l l y acquired see, Marx, C a p i t a l , V o l . I l l , ch. x v i , pp. 279-280. 41 c o n t r o l of i n d u s t r y . But, though they secured supremacy over produc-t i o n , the main concern of merchant-manufacturers remained i n the sphere of buying and s e l l i n g . The i n d u s t r i a l - c a p i t a l i s t continued to need both the banker and the merchant, as Paul Mantoux s t a t e s , "one to give him c r e d i t and the other customers, while i n r e t u r n he pro-vided the one w i t h investments, and the other w i t h goods. But he never merged h i s own i n d i v i d u a l i t y i n t h e i r s . He had h i s own s p e c i a l work, which was to organize i n d u s t r i a l p roduction, and h i s own s p e c i a l i n t e r e s t s , to the a i d of which he very soon learned to t u r n p o l i t i c a l power. With the f a c t o r y system a new c l a s s , a new s o c i a l type, came xnto being . The concept of c l a s s i s r e l a t e d to the economic s t r u c t u r e of a s o c i a l formation. The d i f f e r e n c e between the s t r u c t u r e of r e l a t i o n s of production of these two c a p i t a l i s t forms of production has the e f f e c t , at the economic l e v e l , of d i s t r i b u t i n g the agents of produc-t i o n i n t o d i f f e r e n t s o c i a l c l a s s e s . Both merchant and i n d u s t r i a l c a p i t a l i s t s f u n c t i o n as organizers of c a p i t a l , machines and labour-power; that i s , as organizers of production (the r e a l a p p r o p r i a t i o n r e l a t i o n ) . But the s p e c i f i c form under which production takes place i s a l s o c o n s t i t u t e d by the r e l a t i o n s of production (the property r e -l a t i o n ) . And i t i s the form i n which unpaid surplus-value i s pumped out of the d i r e c t producer that r e s u l t s , i n the f i e l d of c l a s s r e l a t i o n s , i n the d i s t r i b u t i o n of men i n t o s o c i a l c l a s s e s . In other Paul Mantoux, The I n d u s t r i a l R e v o l u t i o n i n the Eighteenth  Century (London, Jonathan Cape, 1961 (1928), p. 367. 42 words, the d i f f e r e n t economic s t r u c t u r e s of merchant and I n d u s t r i a l  c a p i t a l i s m r e s u l t i n d i f f e r e n t s o c i a l c l a s s e s w i t h d i f f e r e n t economic  and p o l i t i c a l i n t e r e s t s . (D) M e r c a n t i l i s m & B r i t i s h Expansion In the m e r c a n t i l i s t epoch, the expansion of the B r i t i s h Empire was l a r g e l y the r e s u l t of the a c t i v i t i e s of the merchant c l a s s . The A b s o l u t i s t Monarchy aided the merchant c a p i t a l i s t i n the e a r l y p e r i o d of c o l o n i a l expansion by exterminating the fe u d a l nobles who blocked the export of wool; by p r o t e c t i n g p i r a t e s and marauders such as Drake;"*" and by c h a r t e r i n g monopolies and j o i n t - s t o c k companies w i t h e x c l u s i v e p r i v i l e g e s f o r overseas trade. For example: John Cabot was granted a r o y a l patent by Henry VII i n 1496 to "subdue, conquer and possess" f o r e i g n lands; i n 1505 Henry V I I gave a cha r t e r to the Company of Mer-chants; John Hawkins went on h i s f i r s t s l a v e e x p e d i t i o n i n 1572; i n 1585 S i r Walter R a l e i g h e s t a b l i s h e d V i r g i n a ; the East I n d i a Company was chartered i n 1600; and the Hudson's Bay Company, a r e l a t i v e l a t e -comer to the scene, obtained i t s c h a r t e r i n 1670. The combined c a p i t a l of a l l of the chartered Companies i n England amounted to 4 m i l l i o n pounds i n 1695, by 1720 i t had climbed to 50 m i l l i o n pounds. The s i x -teenth century was the era of the f r e e booting and plundering "Mer-chant Adventurer"; the p r i v i l e g e d t r a d i n g companies who e s t a b l i s h e d the slave trade, t r a d i n g s t a t i o n s and c o l o n i a l settlement. Drake's second voyage r e a l i z e d 600,000 pounds on an i n i t i a l c a p i t a l of 5,000 pounds; t h i s l a t e r formed the ba s i s of the East I n d i a Company. 43 The A b s o l u t i s t Monarchy, though a i d i n g the e a r l y merchant c a p i t a l i s t s , e v e n t u a l l y stood i n the way of economic expansion. The P u r i t a n R e v o l u t i o n , however, swept away the o b s t a c l e s of commercial expansion and assured the growing predominance of the merchant c a p i -t a l i s t c l a s s . This c l a s s developed a s o l i d a r i t y of i n t e r e s t w i t h landed property as long as the l a t t e r c l a s s continued to buy the l u x -ury goods imported by the merchants and to provide c a p i t a l f o r h i s commercial adventures. In the commercial towns the merchants formed an a r i s t o c r a c y of s o r t s , and, they g r a d u a l l y acquired c o n t r o l of i n -dustry. But, though they secured supremacy over p r o d u c t i o n , the main concern of merchant manufacturers remained i n the sphere of buying and s e l l i n g . The i n t e r e s t s of the merchant c a p i t a l i s t were i n trade and commerce, and they d i r e c t e d State power toward t h i s o b j e c t i v e . The Corn Laws, the Navigation Laws, and high t a r i f f s were implemented to p r o t e c t the merchant-manufacturers, to reserve the c o l o n i a l trade to England, and thus, to ensure an adequate supply of raw m a t e r i a l s f o r the entrepot trade, and to c o n t r o l the export of f o o d s t u f f s . N a t i o n a l u n i f i c a t i o n , p r o t e c t i o n i s m , b u l l i o n i s m and c o l o n i a l expansion were a l l p o l i c i e s designed to make money r a t h e r than to produce goods. This was the t r a d i t i o n a l m e r c a n t i l i s m that Smith and Hume attacked so vigorous-l y . M e r c a n t i l i s m , as a system of State power, stood f o r the complete c o n t r o l by p u b l i c a u t h o r i t y of economic a c t i v i t y ; the e x p l o i t a t i o n of n a t u r a l wealth and the exchange of goods i n the entrepot trade were n a t i o n a l p o l i c i e s . 44 In s h o r t , the M e r c a n t i l e System was a system of State-regulated e x p l o i t a t i o n through trade which played a h i g h l y important r o l e i n the adolescence of c a p i t a l i s t i n d u s t r y : i t was e s s e n t i a l l y the econo-19 mic p o l i c y of an age of p r i m i t i v e accumulation. With the turn of the 19th century i n England, however, a new c l a s s was emerging: a c l a s s that was seeking State power i n order to implement i t s own s p e c i f i c i n t e r e s t s : the i n d u s t r i a l c a p i t a l i s t . I n -d u s t r i a l c a p i t a l had an i n t e r e s t i n lowering the cost of production and i n removing the r e s t r i c t i o n s on the f r e e flow of commodities, i n -c l u d i n g l a b o r . I t was opposed to monopoly and p r o t e c t i o n i s m : the two r e s t r i c t i o n s that r a i s e d the p r i c e of raw m a t e r i a l s and a g r i c u l t u r a l products, and thus the cost of production. The ideology of i n d u s t r i a l c a p i t a l was f r e e trade and l a i s s e z - f a i r e . With the maturing of i n -d u s t r i a l c a p i t a l i s m , the i n d u s t r i a l f r a c t i o n of the c a p i t a l i s t c l a s s was a b l e , i n a l l i a n c e w i t h merchant c a p i t a l , to d i r e c t State power X S Maurice Dobb, Studies i n the Development of C a p i t a l i s m , p. 209. Cf. Marx, C a p i t a l , V o l . I , ch. x x x i , pp. 823-824: "The d i s c o v e r y of gold and s i l v e r i n America, the e x t i r p a t i o n , enslavement and entomb-ment i n mines of the a b o r i g i n a l p o p u l a t i o n , the beginning of the con-quest and l o o t i n g of the East I n d i e s , the t u r n i n g of A f r i c a i n t o a warden f o r the commercial hunting of b l a c k - s k i n s , s i g n a l i z e d the rosy dawn of the era of c a p i t a l i s t production. These i d y l l i c proceedings are the c h i e f moments of p r i m i t i v e accumulation....The d i f f e r e n t mom-enta of p r i m i t i v e accumulation.... In England at the end of the 17th cen-t u r y , they a r r i v e at a s y s t e m a t i c a l combination, embracing the c o l o n i e s , the n a t i o n a l debt, the modern mode of t a x a t i o n , and the p r o t e c t i o n i s t system. These methods depend i n part on brute f o r c e , eg., the c o l o n i a l system. But they a l l employ the power of the State, the concentrated and organized f o r c e of s o c i e t y , to hasten, hothouse f a s h i o n , the pro-cess of transformation of the f e u d a l mode of production i n t o the c a p i -t a l i s t mode, and to shorten the t r a n s i t i o n . " 45 toward removing the v a r i o u s o b s t a c l e s to i n d u s t r i a l production. Robert P e e l , i n h i s budget of 1842, changed the t a r i f f s t r u c t u r e and the whole system of t a x a t i o n , and i n 1846 and 1849 the movement to f r e e trade was completed w i t h the r e p e a l of the Corn Laws and the Naviga-t i o n Laws. As Engels wrote: Free Trade meant the readjustment of the whole home and f o r e i g n , commercial and f i n a n c i a l p o l i c y of England i n accordance w i t h the i n t e r e s t s of the manufacturing c a p i t a l i s t s the c l a s s that now r e -presented the n a t i o n . F r e d e r i c k Engels, "England i n 1845 and 1885" (Excerpt 1885), i n Marx & Engels, On C o l o n i a l i s m (Moscow, Progress P u b l i s h e r s , 1968), p. 265. With the advent of Free Trade the E n g l i s h economy expanded r a p i d l y . In 1842 the value of B r i t i s h exports equalled 47,250,000 pounds; by 1870 they had climbed to 200 m i l l i o n pounds. T o t a l im-p o r t s between 1850 and 1870 increased from 100 m i l l i o n pounds to 300 m i l l i o n pounds. B r i t a i n exported more than j u s t manufactured goods, however, she a l s o exported men and c a p i t a l . Between 1853 and 1880, 2,466,000 people migrated from the B r i t i s h I s l e s ; i n 1849, the year of the C a l i f o r n i a n Gold Rush, 300,000 l e f t the ports of England alone. And by 1870, B r i t a i n had 800 m i l l i o n pounds invested abroad, n e a r l y a 300 percent increase since 1850 (David Thomson, England i n  the Nineteenth Century, 1815 to 1914 (Penquin, 1950), pp. 83, 138, 164). But as Engels s a i d : "The u n p a r a l l e l e d expansion of B r i t i s h manufactures and commerce between 1848 and 1866 was no doubt due, to a great extent, to the removal of the p r o t e c t i v e d u t i e s on food and raw m a t e r i a l s . But not e n t i r e l y . The above years comprise the d i s c o v e r y and working of the C a l i f o r n i a n and A u s t r a l i a n gold f i e l d s which increased so immensely the c i r c u l a t i n g medium of the world; they mark the f i n a l v i c t o r y of steam over a l l other means of t r a n s -p o r t ; on the ocean, steamers now superseded s a i l i n g v e s s e l s ; on l a n d , i n a l l c i v i l i z e d c o u n t r i e s , the r a i l r o a d took the f i r s t p l a c e , the macadamized road the second; t r a n s p o r t now became four times quicker and four times cheaper. No wonder that under such favourable c i r -cumstances B r i t i s h manufactures worked by steam should extend t h e i r sway at the expense of f o r e i g n domestic i n d u s t r i e s based upon manual labour" (Engels, " P r o t e c t i o n and Free Trade", i n Marx & Engels, On  C o l o n i a l i s m , p. 269). 46 I t must be noted, however, that the p o l i t i c a l and economic i n -t e r e s t s of merchant and i n d u s t r i a l c a p i t a l are by no means u n i v e r s a l or f i x e d f o r a l l times. On the c o n t r a r y , they depend on the r e l a t i o n of f o r c e s i n the c l a s s s t r u g g l e and on the concrete h i s t o r i c a l s i t u a -t i o n i n which i t occurs. While England could a f f o r d to pursue a p o l i c y of f r e e trade and to espouse the myth of non-interference by government, the i n d u s t r i a l i s t s of America were forced to erect p r o t e c -t i v e t a r i f f s , during and a f t e r the C i v i l War, i n order to protect her nascent i n d u s t r y . The pe r i o d from the American Rev o l u t i o n to the 1840s was a pe r i o d of e x t r a o r d i n a r y a c t i v i t y f o r American c a p i t a l i s m , but i t was a period of merchant c a p i t a l i s m , not i n d u s t r i a l c a p i t a l i s m . The i n i t i a l o p p o r t u n i t i e s of merchant c a p i t a l were i n the development of western lands ( s p e c u l a t i o n ) , i n the p r o v i s i o n i n g of the means of communications i n t o the i n t e r i o r ( t r a n s p o r t a t i o n ) , i n expanding the c a r r y i n g trades, and i n f i n a n c i n g of s p e c u l a t i v e t r a d i n g and manufac-t u r i n g operations. I n d u s t r i a l c a p i t a l i s m only began to emerge i n America a f t e r these investment o p p o r t u n i t i e s began to be exhausted. The e a r l y 1840s marked the s t a r t of the r i s e of i n d u s t r i a l c a p i t a l , but i t f e l l short of f u l l development because i t was not i n c o n t r o l of State power. I t became apparent by the l a t e 1850s that the i n d u s t r i a l f r a c t i o n of the c a p i t a l i s t c l a s s would need power i n order to f u l l y mature. The C i v i l War i n the United States can be i n t e r p r e t e d as a s t r u g g l e between two f r a c t i o n s of the bo u r g e o i s i e , each r e q u i r i n g con-t r o l of State power to underwrite i t s own economic and s o c i a l program.' see, Louis Hacker, The Triumph of American C a p i t a l i s m , p. 340. 47 (E) I n d u s t r i a l C a p i t a l i s m and Imperialism As B r i t a i n ' s productive power grew, a new element was added to the ideology of i n d u s t r i a l c a p i t a l i s m : L i t t l e Englandism. This s u p e r i o r economic power, which found expression i n the d o c t r i n e s of l a i s s e z - f a i r e and f r e e trade, seemed so i n v i n c i b l e to the new r u l i n g c l a s s r e p r e -s e n t a t i v e s of the B r i t i s h manufactures that concep-t i o n s began to gain currency during the middle n i n e -teenth century which dismissed the whole c o l o n i a l systen^gs a superfluous extravagance and an obsolete r e l i c . An o l d e r i n t e r p r e t a t i o n of the m i d - V i c t o r i a n era had argued that the economic reasons f o r empire had been removed w i t h the break-down of m e r c a n t i l i s m and c o l o n i a l preferences and w i t h the success of f r e e trade:, the f i s c a l advantages of the empire were gone w h i l e the burdens of i m p e r i a l defense remained. In the 1840s, f o r example, B r i t a i n was spending upwards of 4 m i l l i o n pounds a year f o r m i l i t a r y establishments Palme Dutt, The C r i s i s of B r i t a i n i n the B r i t i s h Empire, pp. 73-74. Cf. E. J . Hobsbawm, Industry and Empire (New York, Random House, 1968), p. 196: "By the end of the Napoleonic Wars B r i t a i n ' s p o s i t i o n was u n a s s a i l a b l e . As the only i n d u s t r i a l power, she could u n d e r s e l l anyone e l s e , and the l e s s d i s c r i m i n a t i o n there was, the more she could u n d e r s e l l . As the only naval power i n the world she con-t r o l l e d access to the non-European world, on which her p r o s p e r i t y r e s t e d . With one major exception (India) she d i d not, economically speaking, need even c o l o n i e s , f o r the e n t i r e underdeveloped world was her colony, and would remain so i f , under Free Trade, they bought i n the cheapest market and s o l d i n the dearest, which meant, i f they bought and s o l d i n the only b i g market there was, B r i t a i n . T h i s , at a l l events, i s how matters looked to men who r e a d i l y confused the h i s t o r i c accident of B r i t a i n ' s e a r l y i n d u s t r i a l s t a r t w i t h the f o r t -unate d i s p e n s a t i o n of a providence that had, apparently, f i t t e d the B r i t i s h to be the workshop of the world and the r e s t to produce co t t o n , timber or t e a . " 48 and expenses alone, whereas by 1850, she was conducting more trade with the United States than a l l of her colonies combined and at only 23 15,000 pounds a year for consular services. Thus, according to t h i s view, the mid-Victorians no longer saw the need for maintaining the imperial l i n k s and they became intent on dismembering the f i n a n c i a l burdens of empire. This argument, however, misinterprets the nature and character of imperialism. With the development of i n d u s t r i a l capitalism, the old conception of empire, based l a r g e l y on the alleged advantages of con-t r o l l i n g imperial trade, was replaced by a new one based on an i n t e r -n arional d i v i s i o n of labour, with B r i t a i n exchanging manufactured and c a p i t a l goods, financed by B r i t i s h loans and investments, for food-s t u f f s and raw materials. Imperialism remained a basic feature of i n -d u s t r i a l capitalism. As A. G. L. Shaw said: It seems doubtful i f there was any period of a n t i -imperialism i n nineteenth-century England. There was always a n t i - i m p e r i a l i s t w r i t e r s , but at no per-iod did they represent the mood of the very powerful p o l i t i c a l groups. The C o l o n i a l Reformers and the members of the so-called Manchester School advocated the repeal of the Corn Laws, not because of a n t i -i m p e r i a l i s t s sentiments, but because they wanted to ensure England an ' "informal" trade empire. The repeal of the Corn Laws were necessary 23 James A. Williamson, A Short History of B r i t i s h Expansion, 6th edt. (New York, St. Martin's Press, 1967), pp. 53-55. A. G. L. Shaw, "Introduction", i n Shaw (ed.), Great B r i t a i n  and the Colonies (London, Methuen & Company, 1970), p. 25. 49 to f u r t h e r the d i v i s i o n of labor between North America and England and to make B r i t a i n the "workshop of the world". The system of i n -formal empire would extend the f i e l d of employment of c a p i t a l , and both E n g l i s h c a p i t a l i s t s and workers would prosper as a r e s u l t . B r i t a i n wanted f r e e access to markets and new f i e l d s f o r investment of surplus c a p i t a l ; her t e c h n o l o g i c a l s u p e r i o r i t y and her immense productive c a p a c i t y made the i m p o s i t i o n of m e r c a n t i l i s t r e s t r i c t i o n s reduntant. But though there was f r e e r trade a f t e r 1815, the C o l o n i a l Refor-mers by the 1830s were not a n t i - c o l o n i a l . B r i t a i n a l s o needed a f o r -mal empire f o r market and investment c o n d i t i o n s of " s p e c i a l s a f e t y " . Colonies were more d e s i r a b l e , as Brougham s a i d , "than the t e r r i t o r i e s of h o s t i l e and r i v a l neighbours 1. 1. In them "s p e c u l a t i o n s can.. .be undertaken w i t h greater s a f e t y and c a p i t a l invested i n a c o l o n i a l 25 trade w i t h much l e s s danger". C o l o n i z a t i o n was seen as d e s i r a b l e and necessary as v a l u a b l e markets and as o u t l e t s f o r surplus c a p i t a l and p o p u l a t i o n . The o p p o s i t i o n to c o l o n i z a t i o n had i n i t i a l l y come from those c a p i t a l i s t s who d e s i r e d to maintain an abundant supply of cheap l a b o r , but as Edward Gibbon Wakefield argued, f o r example, low wages and over-population would lea d to discontent and r e v o l u t i o n , and thus, the i n s e c u r i t y of property. • C o l o n i z a t i o n would provide r e l i e f c i t e d i n i b i d . , p. 7. 50 from excessive p o p u l a t i o n and r e l i e v e the mounting s o c i a l pressures. Colonies would a l s o provide a remedy f o r the " g l u t of c a p i t a l " at home. Competition amongst c a p i t a l i s t s had decreased the r a t e of pro-f i t and caused c r i s i s , business f a i l u r e and c l a s s c o n f l i c t . The s o l u t i o n to t h i s problem was an expansion of the " f i e l d of pro d u c t i o n " by e s t a b l i s h i n g trade empires and c o l o n i e s . The export of c a p i t a l would open new t e r r i t o r i e s , reduce the costs of producing food, im-prove the B r i t i s h terms of trad e , r a i s e the r a t e of p r o f i t at home, and t h e r e f o r e , increase domestic investment beyond the former l e v e l . The r e s u l t would be to render the E n g l i s h working c l a s s "comfortable, 27 s a t i s f i e d , and wise, at l e a s t , as the working c l a s s i n America. The c l a s s s t r u g g l e was looming l a r g e " i n a country s i t u a t e d l i k e England, i n which the r u l i n g and the subject orders are no longer separated by a middle c l a s s , and i n which the subject order, composing the bulk of the people, are i n a s t a t e of gloomy dis c o n t e n t a r i s i n g from excessive numbers; f o r such a country, one c h i e f end of c o l o n i -z a t i o n i s to prevent tumults, to keep the peace, to maintain order, to uphold confidence i n the s e c u r i t y of property, to hinder i n t e r r u p t i o n s of the r e g u l a r course of i n d u s t r y and trad e , to avert the t e r r i b l e e v i l s , which, i n a country l i k e England, could not but f o l l o w any se r i o u s p o l i t i c a l c o n v u l s i o n " . Wakefield, England and America (New York, 1834), I I , p. 105, a l s o c i t e d i n H.O. Pappe, "Wakefield and Marx", i n Shaw (ed.), B r i t a i n and the Co l o n i e s , p. 204. C i t e d i n B. Sammel, "The P h i l o s o p h i c a l R a d i c a l s & C o l o n i a l i s m " , i n Shaw (ed.), B r i t a i n and the Co l o n i e s , p. 81. 51 (F) Conclusion In the 17th and 18th c e n t u r i e s the Im p e r i a l government c o n t r o l l e d the c o l o n i e s by a v a r i e t y of methods: by enacting Navigation Laws; by p r o h i b i t i n g the manufactures of the c o l o n i e s from e n t e r i n g i n t e r c o l o n -i a l or f o r e i g n trade; by managing the colony's money supply; and by e s t a b l i s h i n g e f f e c t i v e a d m i n i s t r a t i v e i n s t i t u t i o n s and agencies to en-fo r c e the r e s t r a i n t s (e.g., P r i v y C o u n c i l , Board of Trade, C o l o n i a l Secretary, Commissioners of Customs, Treasury, A d m i r a l t y , Royal Gov-er n o r s ) . The s i g n i f i c a n c e of these r e s t r a i n t s and c o n t r o l s was n o t . i n c r e a t i n g p o l i t i c a l and c o n s t i t u t i o n a l t i e s between the colony and mother country, but i n binding the colony to England w i t h i n the imper-i a l - c o l o n i a l nexus. The c h i e f purpose f o r e s t a b l i s h i n g c o l o n i e s i n the e a r l y m e r c a n t i l i s t era was to o f f s e t the hazards of trade and to pre-serve and maintain monopoly c o n t r o l . B r i t i s h c o l o n i z a t i o n i n the 19th century, however, was more concerned w i t h opening up the p o s s i b i l i t i e s of trade and investment than w i t h m a i n t a i n i n g an a r t i f i c i a l l y closed and m o n o p o l i s t i c a l l y c o n t r o l l e d t r a d i n g system. In the e a r l i e r p e r i o d , c o l o n i a l i s m was defensive i n nature, whereas i n the 19th century, e s p e c i a l l y a f t e r 1870, i t was much more aggressive i n character, w i t h the s t a t e a c t i v e l y searching out trade and investment o p p o r t u n i t i e s . B r i t i s h p o l i c y on the Northwest P a c i f i c Coast d i s p e l s the " c l a s s -i c a l view" that argues that the middle decades of the 19th century was a pe r i o d of " i n d i f f e r e n c e " toward empire. The B r i t i s h government was f a r from being i n d i f f e r e n t ; the establishment of the Colony of Vancouver I s l a n d i n 1849 and l a t e r , the Colony of B r i t i s h Columbia l i k e the annexation of the Punjab or the occupation of Hong Kong r e v e a l s the c o n t i n u i t y of B r i t i s h i m p e r i a l p o l i c y . The e s s e n t i a l d i f f e r e n c e 52 between me r c a n t i l i s m and 19th century i m p e r i a l i s m , however, was that under m e r c a n t i l i s m c o l o n i a l conquest was the only method of c o n t r o l -l i n g the l i v e l y entrepot trade, a trade that involved the exchange of goods f o r goods, whereas i n the 19th century, B r i t a i n was able to e x e r c i s e c o n t r o l because of her advanced i n d u s t r i a l c a p a c i t y and through the techniques of c a p i t a l and commercial p e n e t r a t i o n . B r i t a i n was the "workshop of the world", and B r i t i s h s h i p p i n g , protected by the Navy, dominated world trade. As R. Palme Dutt wrote: "The o l d c o l o n i a l 28 monopoly developed i n t o world i n d u s t r i a l monopoly". The massive growth of B r i t i s h i n d u s t r y placed new demands on B r i t i s h p o l i c y . I t was no longer a matter of c o n t r o l l i n g the exchange of surface s t a p l e products; the st r a t e g y i n v o l v e d converting underdeveloped regions i n t o complementary h i n t e r l a n d economies; s a t e l l i t e regions that would pro-v i d e raw m a t e r i a l s and food f o r Great B r i t a i n , w h i l e at the same time p r o v i d i n g widening markets f o r her manufactures and surplus c a p i t a l . Dutt, The C r i s i s of B r i t a i n and the B r i t i s h Empire, p. 72. THE FUR TRADE AND BRITISH EXPANSION: 1785-1858 53 (A) I n t r o d u c t i o n The f u r trade was r e s p o n s i b l e f o r extending B r i t i s h a u t h o r i t y across the North American con t i n e n t . As J . S. G a l b r a i t h wrote: The Hudson's Bay Company and the North West com-panies, by t h e i r e x p l o r a t i o n s and t r a d i n g posts, had l a i d the b a s i s f o r B r i t i s h claims to the northwest coast. The amalgamated Company had been the primary pressure group i n f l u e n c i n g the Foreign O f f i c e i n i t s n e g o t i a t i o n s w i t h other s t a t e s . I t s knowledge of the land was indispensable to the prosecution of the B r i t i s h case i n the boundary d i s -pute. B r i t i s h Columbia became B r i t i s h r a t h e r than  American or Russian l a r g e l y because of the work of a " small number of f u r t r a d e r s and of the c a p i t a l i s t s  they represented. P u r s u i t of p r o f i t s thus r e s u l t e d i n the expansion o| B r i t i s h p o l i t i c a l a u t h o r i t y i n t o northwest America. But, w h i l e i t i s true that the f u r trade was r e s p o n s i b l e f o r the ex-pansion of B r i t i s h p o l i t i c a l a u t h o r i t y i n t o the P a c i f i c Northwest, i t must be remembered that i t occurred w i t h i n the framework of expanding c a p i t a l i s m i n the 19th century, and that the process was that of economic i m p e r i a l i s m . The process of economic i m p e r i a l i s m , however, John S. G a l b r a i t h , Hudson's Bay Company as an I m p e r i a l Factor, 1821-1869 (Berkley & Los Angeles, U n i v e r s i t y of C a l i f o r n i a Press, 1957), p. 174 (my emphasis). Cf. Harold I n n i s , The Fur Trade i n  Canada (Toronto, U n i v e r s i t y of Toronto Press, 1970 (1930), p. 392: "The Northwest Company and i t s successor the Hudson's Bay Company e s t a b l i s h e d a c e n t r a l i z e d o r g a n i z a t i o n which covered the northern h a l f of North America from the A t l a n t i c to the P a c i f i c . The import-ance of t h i s o r g a n i z a t i o n was recognized i n boundary d i s p u t e s , and i t played a l a r g e r o l e i n the numerous n e g o t i a t i o n s r e s p o n s i b l e f o r the l o c a t i o n of the present boundaries. I t i s no mere accident that the present Dominion c o i n c i d e s roughly w i t h the f u r - t r a d i n g areas of northern North America". 54 cannot be viewed as a simple, unique c o n t r a d i c t i o n ; r e l a t i o n s of de-pendence have always e x i s t e d on the margins of c a p i t a l i s m . In order to adequately understand the nature and character of B r i t i s h imper-i a l i s m ^ i n the P a c i f i c Northwest, i t must be r e l a t e d to the development of concrete modes of production i n B r i t a i n and Canada. The instruments of i m p e r i a l i s m and the character of the economic development of the h i n t e r l a n d r egion changed as the economic s t r u c t u r e of the metropole changed. In the e a r l y 19th century, the Northwest P a c i f i c Coast was a marginal r e g i o n of i n t e r e s t to Great B r i t a i n ; i t was remote and there was no great m e t r o p o l i t a n demand f o r resources other than f u r . B r i -t a i n was nevertheless w i l l i n g to use whatever means necessary to e s t a -b l i s h the s e c u r i t y of trade, to check American growth, and to maintain the s t r a t e g i c i n t e r e s t s of the empire. U n t i l the l a t e 1850s the Hud-son's Bay Company acted as the instrument of B r i t i s h i m p e r i a l p o l i c y ; i t was the i n f o r m a l instrument of i m p e r i a l expansion, maintaining B r i -t i s h paramountcy and i n t e g r a t i n g the region i n t o B r i t a i n ' s own expand-ing economy by means of the m e r c a n t i l i s t technique of monopoly. The Hudson's Bay Company opened the door to f u t u r e trade and investment and preserved the s t r a t e g i c i n t e r e s t s of the empire without the B r i t i s h government r e s o r t i n g to formal annexation or o u t r i g h t p o l i t i c a l pos-s e s s i o n . B r i t i s h commercial p e n e t r a t i o n followed the p o l i c y of "trade 2 w i t h i n f o r m a l c o n t r o l i f p o s s i b l e , trade w i t h r u l e i f necessary". Gallagher & Robinson, "The Imperialism of Free Trade", op. c i t . , p. 13. 55 The massive expansion of i n d u s t r y i n B r i t a i n a f t e r 1815, and the nascent development of i n d u s t r i a l c a p i t a l i s m i n the United S t a t e s , however, had the e f f e c t of a l t e r i n g the character of economic develop-ment i n Canada and i n transforming the r e l a t i o n of forces i n the P a c i -f i c Northwest. In Canada, the breakdown of the low t a r i f f B r i t i s h m e r c a n t i l e system and the growing.protectionism of the United States r e s u l t e d i n the formative development of a great u n i f i e d commercial system w i t h i n the context of B r i t i s h i m p e r i a l i s m . The Canadian r u l i n g c l a s s , i n a l l i a n c e w i t h E n g l i s h f i n a n c i a l c a p i t a l , turned i t s a t t e n t i o n toward c o n t i n e n t a l c o n s o l i d a t i o n and expansion. On the P a c i f i c Coast, i t was becoming apparent by the 1840s that a monopoly t r a d i n g o r g a n i z a t i o n , w i t h i t s emphasis on defensive ex- pansionism, was no longer able to maintain and preserve B r i t i s h para-mountcy i n the face of the aggressive expansionism of the United States based on i n d u s t r i a l i z a t i o n , i n t e r n a l f r e e trade and settlement. In order to check American growth and to preserve and maintain her s t r a t -e gic i n t e r e s t s , B r i t a i n engaged i n a formal p r o j e c t of c o l o n i z a t i o n . In 1849 the Colony of Vancouver I s l a n d was granted to the Hudson's Bay Company: the m e r c a n t i l i s t technique of i n f o r m a l empire gave way to i n -d i r e c t c o l o n i a l r u l e . In 1858, however, the pe r i o d of Hudson's Bay Company c o l o n i a l r u l e came to an end. In England f r e e trade t h e o r i e s were beginning to sup-pla n t m e r c a n t i l i s t ones. The Hudson's Bay Company was a "throw-back" to the m e r c a n t i l i s t e r a , an era of merchant c a p i t a l i s m , and w i t h the development of i n d u s t r i a l c a p i t a l i s m i n B r i t a i n a new dimension i n the character of trade and expansion, and a new dimension i n the character 56 of i m p e r i a l i s m was emerging. The f r e e trade, anti-monopoly sentiment i n England had been s t e a d i l y growing throughout the preceding decade and i t f i n a l l y culminated i n the parliamentary hearings on the Hudson's Bay, Company i n 1857. The new alignment of c l a s s e s , as r e f l e c t e d i n the House of Commons, and the d i s c o v e r y of gold on the Fraser River i n 1858 combined to cease the o u t r i g h t domination of the Colony by the Hudson's Bay Company. Between 1858 and 1871, B r i t i s h Columbia was d i r e c t l y administered by the Crown. In sum then, the B r i t i s h government u t i l i z e d a v a r i e t y of t e c h -niques to e s t a b l i s h and maintain paramountcy i n the P a c i f i c North-west: these ranged from the m e r c a n t i l i s t techniques of g r a n t i n g an i m p e r i a l l i c e n c e of e x c l u s i v e trade to the Hudson's Bay Company, to the c o n s i s t e n t use of the Royal Navy, to both d i r e c t and i n d i r e c t c o l -o n i a l a d m i n i s t r a t i o n , and on the American P a c i f i c seaboard, as we w i l l see l a t e r , to the use of the techniques of f r e e trade and c a p i t a l p e n e t r a t i o n . But r e g a r d l e s s of the form, the e s s e n t i a l thread running throughout the e n t i r e h i s t o r y of the North P a c i f i c , from the days of the e a r l y maritime f u r trade to B r i t i s h Columbia's entry i n t o Confed-e r a t i o n i n 1871, remained constant: commercial p e n e t r a t i o n , economic dependence and the absorption of the regions economic surplus by the metropole. In other words, B r i t a i n was remarkably c o n s i s t e n t i n attempting to i n t e g r a t e the r e g i o n i n t o her own expanding economy. 57 (B) The Maritime Fur Trade The h i s t o r y of the P a c i f i c Northwest was dominated by r i v a l im-p e r i a l powers attempting to integrate the region into t h e i r own expanding economies. The n a t i o n a l i s t r i v a l r y of the eighteenth cen-tury between Spain, Russia, B r i t a i n and the United States was a r i v a l -ry based on the quest for favourable trade positions and not i n i t i a l l y on t e r r i t o r y . They a l l sought to dominate the economic a f f a i r s of the region by monopolizing the c o a s t a l ports, and thus the inland trade. "The early r i v a l r i e s i n the North P a c i f i c " , as Easterbrook and A i t k i n wrote, "were part of a world-wide struggle for c o n t r o l of trade routes 3 and s t r a t e g i c resources". The emphasis was on trade positions rather than t e r r i t o r i a l expansion. The search for the Northwest Passage and l a t e r f o r an overland route to the P a c i f i c Ocean was at the d i r e c t i o n of metropolitan centers on the eastern seaboard and i n England. As 4 Herman J. Deutsch pointed out, the early maritime h i s t o r y of the P a c i -f i c Northwest did not follow the sequence of development as put f o r t h by F. J . Turner i n h i s " f r o n t i e r t h e s i s " : the fur trader followed by the pioneer, with the s e t t l e r f i n a l l y leading the way for the c a p i t a l -i s t . Turner saw the growth of the United States as e s s e n t i a l l y an expansionist process, and not one of p o l i t i c a l or economic imperialism. W. T. Easterbrook & H. G. J . A i t k i n , Canadian Economic History, (Toronto, MacMillan, 1956), p. 206. 4 Herman J . Deutsch, "Economic Imperialism i n the Early P a c i f i c Northwest", The P a c i f i c H i s t o r i c a l Review, Vol. IX, no. 4 (December, 1940), pp. 377-388. see, F. J . Turner, Frontier i n American History (New York, 1920). 58 While t h i s was the usual sequence, i t ignored the f a c t that the f u r tr a d e r himself was a c a p i t a l i s t or h i s employee, e x t r a c t i n g s u r p l u s -value from the labor of the n a t i v e p o p u l a t i o n i n the production of s t a p l e s , or as a merchant, amassing a fortune through the c i r c u l a t i o n of goods. The merchant-traders who entered the region seldom en-couraged settlement, nor d i d they s e t t l e i n the area a f t e r reaping t h e i r p r o f i t s . ^ Deutsch wrote: Since there i s l i t t l e or no evidence that white men coming to the P a c i f i c Northwest between 1785 and 1805 intended to i d e n t i f y themselves with the area, whereas they d i d secure complete domination over i t s economic a f f a i r s , the most appropriate  d e s c r i p t i o n of the process seems to be economic  imperialism.7 The merchant-traders made vast p r o f i t s , and the c a p i t a l surpluses that were generated seldom remained i n the l o c a l area, where i t could be r e - i n v e s t e d , but was siphoned o f f to the major me t r o p o l i t a n centers of "None of these maritime t r a d e r s attempted to make a settlement on our coast; not one of them erected a permanent h a b i t a t i o n " (F. W. Howay, "The Fur Trade i n Northwestern Development", i n H. Morse Stephens & Herbert E. Bolton (eds.), The P a c i f i c Ocean i n H i s t o r y (New York, MacMillan Co., 1917), p. 277). ^ Deutsch, "Economic:; Imperialism", op_. c i t . , p. 378, (my emphasis). C Boston, London and Montreal. The P a c i f i c Northwest was a h i n t e r l a n d r e g i o n , e x p l o i t e d i n the l i t e r a l sense of the word. The h i s t o r y of the maritime f u r trade i n the North P a c i f i c was, as F. W. Howay s a i d , 9 " e s s e n t i a l l y a hurred l o o t i n g of the coast". Captain W i l l i a m S t u r g i s , an American trader operating out of Boston, wrote: "These fortunes were not acquired, as i n d i v i d u a l wealth not i n f r e q u e n t l y i s , at the expense of our own community, by a tax upon the whole body of consumers, i n the form of enhanced p r i c e s , o f t e n from a d v e n t i t i o u s cause. They were obtained by g i v i n g the Indians a r t i c l e s which they valued more than t h e i r own f u r s , and then s e l l i n g those f u r s to the Chinese f o r such p r i c e s as they were w i l l i n g to pay; thus adding to the wealth of the country, at the expense of f o r e i g n e r s , a l l that was acquired by i n d i v i d u a l s beyond the r e t u r n f o r the use of c a p i t a l , and s u i t a b l e compensation f o r the s e r v i c e s of those employed. This excess was sometimes very l a r g e " ( c i t e d i n i b i d . , pp. 387-88). Hubert H. Bancroft a l s o commented on the e x p l o i t i v e nature of the region's development: "...the f a t e of by f a r the l a r g e s t p o r t i o n s of North America has been at f i r s t to draw i n a popul a t i o n c o v e t i n g only immediate wealth, people from a l l quarters of the globe, i n t e n t on securing g o l d , or f u r s , or encomiendas, f o r t h e i r quick enrichment, then to depart and enjoy t h e i r wealth elsewhere, c a r i n g nothing f o r the country or as to what should have become of i t t h e r e a f t e r " (Ban-c r o f t , C h r o n i c l e r of the B u i l d e r s of the Commonwealth (San F r a n c i s c o , 1891-92), I , p. 586, c i t e d i n i b i d . , p. 388). Howay, B r i t i s h Columbia—The Making of a Province (Toronto, 1928), p. 90. 60 The maritime f u r trade was p r i m a r i l y devoted to c o l l e c t i n g the ski n s of s e a - o t t e r , but i t a l s o included the f u r s of other animals that i n h a b i t e d the coast, such as f u r s e a l , beaver and mar t i n . The o r i g i n a l design of the trade was to c o l l e c t the f u r s from the North-west Coast and to t r a v e l to the Sandwich I s l a n d s , where they would be exchanged f o r sandlewood and other products, and then to China, where the f u r s could command a handsome p r i c e or be exchanged f o r t e a , nankens and s i l k s . As e a r l y as the 1740s, independent Russian merchants and adven-turer's had s o l d s e a - o t t e r , taken from ventures along the A l e u t i a n chain of I s l a n d s , i n the Russian-Chinese market. There was a ready market i n Europe and China f o r s e a - o t t e r , but i t was nob u n t i l - t o w a r d the c l o s e of the century that the Russian t r a d e r s , under more perman-ent c o n d i t i o n s and under government sponsorship, made a s i g n i f i c a n t inroad i n t o the f u r trade, both on the coast and i n the i n t e r i o r . And even here, the Russians u l t i m a t e l y could not s u s t a i n t h e i r ambitions f o r an empire im the North P a c i f i c against the r i v a l pressures of B r i t a i n and the United States. Captain Cook, during h i s v i s i t to the Northwest Coast i n 1778, c l e a r l y recognized the commercial p o t e n t i a l of the r e g i o n . His crew members took aboard sea-otter and they were l a t e r s o l d i n Canton f o r a good p r o f i t . The p u b l i c a t i o n of Cook's experiences on the Coast drew the a t t e n t i o n and ambitions of E n g l i s h merchants. By the l a t e 1780s they were a c t i v e l y engaged i n the f u r trade and enjoyed a mono-poly f o r s e v e r a l years. There were enormous p r o f i t s to be made: f o r example, Captain Hanna, who a r r i v e d at Nootka i n 1785, received over 61 5,000 pounds f o r s e a - o t t e r bartered from the n a t i v e s , and Captains Dixon and P o r t l o c k netted 11,000 pounds f o r t h e i r company i n 1787. The E n g l i s h merchants, however, were hampered by the monopolies of the South Seas Company and the East I n d i a Company, and the trade f e l l p r o g r e s s i v e l y i n t o the hands of the more aggressive Boston merchants, who were not r e s t r i c t e d by monopoly. The free-ranging Boston " C l i p -per" ships would c a r r y the manufactured goods of Europe or the United States around the Cape Horn, and exchange these f o r the P a c i f i c Coast f u r s , and trade these i n t u r n f o r Chinese and Indian products, which they would c a r r y back to the New England p o r t s . The maritime f u r trade only l a s t e d about twenty-five or t h i r t y years. One reason f o r t h i s was the r a p i d d e p l e t i o n of sea-otter i n the northern waters. The maritime trade was a very d e s t r u c t i v e one. When i t opened the sea- o t t e r were very p l e n t i f u l . Between the years, say, 1785 to 1800 i t was not uncommon f o r a v e s s e l to c o l l e c t i n the short sea-son of three or fou r months...from 1,000 to 1,500 or even 1,800 sea-otter s k i n s . W i t h i n t h i r t y years the s e a - o t t e r had become, f o r a l l p r a c t i c a l pur-poses, an e x t i n c t a n i m a l . H The "predatory c h a r a c t e r " of the maritime f u r trade d i d not lead to permanent settlement, and at best i t c o n s t i t u t e d an unequal exchange 12 w i t h a p r i m i t i v e people. The s k i n of the ermine, f o r example, could Henry J . Boam, B r i t i s h Columbia, I t s H i s t o r y , People, Com- merce, I n d u s t r i e s , & Resources, ed. by Ashley G. Brown (London, S e l l s L t d . , 1912), p. 22. F. W. Howay, "Discovery of the Northwest Coast", The Canadian  H i s t o r i c a l A s s o c i a t i o n , Annual Report, 1926, p. 94. Howay, Sage & Angus, B r i t i s h Columbia and the United States, p. 12. 62 be picked up by a tr a d e r on the A t l a n t i c coast and exchanged f o r sea-o t t e r f o r c l o s e to a 3,000 percent p r o f i t ; other t r a d e r s would ex-change l a r g e q u a n t i t i e s of the cheap Chinese copper money or l a r g e 13 q u a n t i t i e s of thimbles i n order to s t r i k e an e q u a l l y good bargain. The d e p l e t i o n of sea-otter s e r i o u s l y d i s l o c a t e d the balanced econo-mic and s o c i a l f a b r i c of the Indians, and the harsh and poor t r e a t -ment of the Indians l e d on s e v e r a l occasions to open h o s t i l i t y and v i o l e n c e . In 1803 the crew of the ship Boston were massacred i n Nootka Sound, and i n 1810 the crew of the Tonquin met a s i m i l a r fate."*" Another reason f o r the d e c l i n e of the maritime f u r trade was the growing dominance of the c o n t i n e n t a l or land f u r trade. The XY Com-pany and the Northwest Company, based i n Montreal, and the Hudson's Bay Company, centered i n London, were e f f e c t i v e l y c u t t i n g communica-t i o n s and trade routes i n t o the P a c i f i c r e g i o n . The Northwest Com-pany and the XY Company were the leaders i n the t r a n s c o n t i n e n t a l ex-pansion of the f u r trade. The e f f e c t s of the expansion of the trade across the continent to the P a c i f i c , however, l e d to sharply increased c o s t s . Much more c a p i t a l was r e q u i r e d to car r y on the trade over long d i s t a n c e s , and the slower turnover of the trade meant increased i n -t e r e s t charges. The high overhead expenses r e q u i r e d to tap the l u c r a -t i v e trade l e d to severe competition, and, i n 1804 the Northwest Howay, "Discovery of the Northwest Coast", op_. c i t . , pp. 93-94. Cf. Marx, C a p i t a l , - V o l . I l l , ch. xx, p. 330: "So long as mer-chant's c a p i t a l promotes the exchange of products between under-developed s o c i e t i e s , commercial p r o f i t not only appears as out bar-g a i n i n g and cheating, but a l s o l a r g e l y o r i g i n a t e s from them". see Henry J . Boam, B r i t i s h Columbia, pp. 29-30. 63 Company absorbed the XY Company. With the heavy c a p i t a l investment necessary to ca r r y on the trade i n v o l v i n g long voyages and w i t h the p r o s e c u t i o n of the trade i n r e s t r i c t e d areas competition was impossible and monopoly c o n t r o l i n e v i t a b l e . A c q u i s i t i o n of t h i s c o n t r o l by the Northwest Company was undoubtedly obtained through i t s c e n t r a l i z e d o r g a n i z a t i o n , i t s e f f i c i e n t and ener g e t i c personnel, and i t s c h a r a c t e r i s t i c e f f e c -t i v e n e s s i n d e a l i n g w i t h the home government.15 In the United S t a t e s , John Jacob Astor and h i s American Fur Com-pany marked the t r a n s i t i o n between the maritime f u r trade and the land f u r trade. A s t o r ' s grand design was to u n i t e the east and west i n a great commercial system. He e s t a b l i s h e d a f o r t at A s t o r i a , on the Columbia R i v e r , but the War of 1812 d i s r u p t e d h i s plans. In 1813 Astor s o l d the f o r t and h i s P a c i f i c Fur Company to the Northwest Com-pany. The Royal Navy's presence o f f the coast u n d e r l i e d A s t o r ' s de-c i s i o n to s e l l . By the e a r l y 1830s, Astor began to move h i s vast 16 fortunes i n t o the urban r e a l e s t a t e business i n New York. The f a i l u r e of John Astor to make good the occupation of the Columbia R i v e r r e g i o n l e d to the 1818 agreement between the United States and B r i t a i n . The Northwest Company was the e f f e c t i v e occupier of the area and some Anglo-American compromise was necessary. The 1818 agreement e s t a b l i s h e d the border between the United States and Harold I n n i s , The Fur Trade i n Canada (Toronto, U n i v e r s i t y of Toronto Press, 1970 (1930), p. 205. Louis Hacker, The Course of American Economic Growth and  Development (New York, John Wiley & Sons, 1970), p. 77. 64 B r i t i s h North America at the 49th degree p a r a l l e l , but from the Rockies to the P a c i f i c the border was to be l e f t undecided and both c o u n t r i e s were to have f r e e access to the re g i o n . The j o i n t occupa-t i o n of the "Oregon Country" was to l a s t ten years, but the agree-ment was renewed i n 1828 i n d i c a t i n g that n e i t h e r country was as yet i n a p o s i t i o n to enforce t h e i r t e r r i t o r i a l c l a i m . Even a f t e r the Northwest Company acquired a dominant p o s i t i o n i n the Northwest P a c i f i c f u r trade the problem of heavy t r a n s p o r t a t i o n costs west of the Rockies remained. The shipment of f u r s from the P a c i f i c r e g i o n to Montreal was very expensive. The s o l u t i o n to the problem was the shipment of s u p p l i e s from England by sea around the Cape Horn to the mouth of the Columbia R i v e r , from where they could be transported to the va r i o u s posts i n the i n t e r i o r . Furs assembled on the coast would be shipped to Canton and exchanged f o r tea and Chinese products, these products would then be brought to England. The monopoly of the East I n d i a Company, however, made d i r e c t trade between the Northwest P a c i f i c coast and China very d i f f i c u l t . To overcome t h i s problem the Northwest Company made an arrangement i n 1815 w i t h a Boston Trading House, and from about 1816 to 1820, the trade i n the North P a c i f i c was f i r m l y i n the hands of the Americans. The Hudson's Bay Company was l a t e r able to develop more s a t i s f a c t o r y maritime connections, but these connections were mainly w i t h England. During the War of 1812, the B r i t i s h blockade of American ports g r e a t l y reduced the number of v i s i t s to the Northwest Coast by the merchant-traders of New England. A f t e r the War, however, they r e -turned i n f u l l f o r c e and engaged i n a l i v e l y commerce i n the ports of 65 South America, C a l i f o r n i a , the Dutch East I n d i e s , and Russian America."*"7 The shipping and t r a d i n g i n t e r e s t of New England were f i r m l y e s t a b l i s h e d i n the Canton trade, and the Northwest Company, unable to form any d i r e c t connections of t h e i r own, took advantage of t h e i r p o s i t i o n . The importance of New England's trade and com-merce i n the North P a c i f i c , however, began to d e c l i n e r a p i d l y by the l a t e 1820s and 1830s. I have already mentioned one reason f o r t h i s : the r a p i d disappearance of the sea-otter on the Northwest Coast. Another reason of equal s i g n i f i c a n c e was the i n c r e a s i n g s h i f t f o r the le a d e r s h i p i n c o n t i n e n t a l expansion from Boston to New York. The i n -fluence toward maritime expansion was weakened i n New England, as i t was i n the r e s t of the n a t i o n , w i t h the growing i n t e r e s t i n i n t e r n a l , «- i . 1 8 c o n t i n e n t a l expansion. The merchants of New York (and of P h i l a d e l p h i a ) continued to trade i n a s i m i l a r f a s h i o n to that of the Boston merchants, but, as-s i s t e d by E n g l i s h merchant-bankers, t h e i r focus of a t t e n t i o n s h i f t e d to the Caribbean and Europe. The vast p r o f i t s accumulated by the New England merchants from the trade with the P a c i f i c Northwest con-19 t r i b u t e d to the foundation of New England's l a t e r i n d u s t r i a l i s m and 1 7 M, Ormsby, B r i t i s h Columbia: A H i s t o r y , p. 66. 18 Easterbrook & A i t k e n , Canadian Economic H i s t o r y , p. 221. 19 G. Myers, H i s t o r y of the Great American Fortunes (New York, F i r s t Modern L i b r a r y E d i t i o n , 1936), p. 65. 66 to the c a p i t a l requirements of i n t e r n a l development. Most of the m e r c h a n t - c a p i t a l i s t s of New England continued as merchants, but at the same time they engaged i n p r i v a t e banking and i n the promoting and f i n a n c i n g of can a l companies, r a i l r o a d s and insurance companies. Their c a p i t a l surpluses financed cotton and woollen m i l l s , the pur-chase of l a r g e t r a c t s of land i n the Southwest and Northwest and i n 20 the f i n a n c i n g of r a i l r o a d c o n s t r u c t i o n i n I l l i n o i s and Michigan. The m e r c h a n t - c a p i t a l i s t s of the A t l a n t i c seaboard continued t h e i r l u c r a t i v e maritime o p erations, but during the 1820s and 1830s the pace of maritime expansion slowed as they channelled t h e i r p r o f i t s i n t o the f i n a n c i n g and promotion of c o n t i n e n t a l expansion. The Amer-i c a n i n f l u e n c e i n the North P a c i f i c continued to grow, and by the 1840s and 1850s maritime expansion became an i n t e g r a l part of t h e i r design to make the United States the center of a great world-wide commercial system. But i n terms of the f u r trade i n the P a c i f i c North-west, the involvement of New England came to an end w i t h the success of the Hudson's Bay Company i n e s t a b l i s h i n g a monopoly throughout the region. (C) The C o n t i n e n t a l Fur Trade The Hudson's Bay Company was, as Easterbrook and A i t k e n des-c r i b e d i t , "a throw-back to an e a r l i e r era...an era when a l l of Eng-land's overseas commerce had been organized under great companies 21 w i t h e x c l u s i v e p r i v i l e g e s granted to them by the Crown . In 1670 20 Louis Hacker, The Course of American Economic Growth &  Development, pp. 76-77—— 1 Easterbrook & A i t k e n , Canadian Economic H i s t o r y y p. 82. 67 Charles I I granted the Hudson's Bay Company an e x c l u s i v e and per-p e t u a l monopoly of trade and commerce i n the area roughly correspond-i n g to the drainage b a s i n of the Hudson's Bay. The company was o r -ganized by a group of B r i t i s h merchants and supported by the a r i s t o -c racy, and throughout i t s h i s t o r y , i t was t i g h t l y c o n t r o l l e d from London. The r i g i d o r g a n i z a t i o n and the c e n t r a l i z e d c o n t r o l of the Hudson's Bay Company, u n l i k e the Northwest Company, which operated w i t h i n a much more f l e x i b l e s t r u c t u r e , p a r t i a l l y accounted f o r the slower pace of expansion across the c o n t i n e n t . As the f u r s through-out the whole Northwest d e c l i n e d , however, the company re-organized i t s personnel p o l i c y . The i n i t i a l geographic advantage of the Hud-son's Bay Company, and the Northwest Company's i n a b i l i t y to adapt i t s expanding o r g a n i z a t i o n to permanent c o n d i t i o n s , and the consequent demand f o r new t e r r i t o r y as f u r s u p p l i e s d e c l i n e d , r e s u l t e d i n severe competition between the two f u r t r a d i n g o r g a n i z a t i o n s . The North-west Company was geared to expanding tra d e , and as expansion h a l t e d , d e c l i n i n g p r o f i t s and r i s i n g costs weakened the o r g a n i z a t i o n . In 1821 the two companies amalgamated. The competition between the two f u r - t r a d i n g companies was a l s o the competition between the St. Lawrence and the Hudson's Bay; be-tween indigenous c a p i t a l and f o r e i g n c a p i t a l and c o n t r o l . The f u r trade of the Northwest Company was very important to the f i n a n c i a l p o s i t i o n of the government of Quebec: between 1783 and 1801, f o r i n -stance, the average duty on f u r s from Quebec equalled 20,000 pounds, and the goods exported f o r the trade amounted to 40,000 pounds 68 annually. 22 A l l of t h i s came to an end i n 1821. Absorption by the Hudson's Bay Company i n 1821 meant the end of Canada's f i r s t t r a n s -c o n t i n e n t a l economic system. Competition from the north d i s r u p t e d the east-west l i n e s of trade which had been extended from Montreal to the P a c i f i c and c o n t r o l over the f u r trade came to be concentrated i n an o r g a n i z a t i o n w i t h headquarters i n London. For the next h a l f - c e n t u r y the economic development of the St. Lawrence Lowlands on the one hand and of the western p r a i r -i e s and the P a c i f i c slope on the other followed almost completely independent coarses. J The c o a l i t i o n of the two great f u r t r a d i n g companies was both a v i c t o r y f o r monopoly and a v i c t o r y f o r E n g l i s h c a p i t a l . The most important immediate r e s u l t of the c o a l i t i o n was the c o n f i r m a t i o n by the B r i t i s h Government of the Hudson's Bay Company's Royal Charter and i t s e x c l u s i v e r i g h t s to trade w i t h i n Rubert's Land. The Company, however, received much more than t h i s . U n l i k e the Northwest Company which had presented a memorial to the B r i t i s h government i n 1812 24 " f o r an e x c l u s i v e c h a r t e r f o r the Northwest Company", the Hudson's Bay Company, by an Act of Parliament, was granted f o r an i n i t i a l p e r i o d of 21 years (which was l a t e r extended) the e x c l u s i v e p r i v i l e g e of t r a d i n g w i t h the Indians over the r e s t of B r i t i s h North America, excluding the e x i s t i n g c o l o n i e s . 22 I n n i s , The Fur Trade i n Canada, p. 178. 23 Easterbrook & A i t k e n , Canadian Economic H i s t o r y , p. 186. 24 I b i d p. 205. 9 69 Despite i t s monopoly p o s i t i o n and c e n t r a l i z e d c o n t r o l , the Hudson's Bay Company continued to face the f a m i l i a r problem of high co s t s of t r a n s p o r t a t i o n and unbalanced cargoes. The Company attemp-ted to reach an agreement w i t h the East I n d i a Company, but the nego-t i a t i o n s f a i l e d , and i t followed f o r a few years the Northwest Com-pany's p r a c t i c e of consigning f u r s to a Boston m e r c a n t i l e f i r m w i t h an agency i n Canton. Even t h i s l i m i t e d trade w i t h China, however, i n -creased by the end of the 1830s. The Company d i d attempt to develop l o c a l sources of s u p p l i e s and to d i v e r s i f y i t s export trade. The de-velopment of a g r i c u l t u r e was more s u c c e s s f u l and i n 1839 the nominally independent Puget's Sound A g r i c u l t u r a l Company was e s t a b l i s h e d . The Company developed an export trade i n salmon and timber w i t h the Sand-wich I s l a n d s and Southern C a l i f o r n i a . For example, i n 1830, Fort Langley prepared 220 b a r r e l s of salmon f o r export and i n 1831, 300 25 b a r r e l s were prepared. But o v e r a l l , the Company remained f i r m l y t i e d to England. The t r a n s - P a c i f i c trade w i t h Canton was not e s t a -b l i s h e d , and the C a l i f o r n i a n and Hawaiian trade, though important i n l a y i n g the foundations f o r l a t e r investment by E n g l i s h and Canadian c a p i t a l i s t s , was not g r e a t l y expanded. The f a i l u r e of the Hudson's Bay Company to develop the North P a c i f i c trade and a d i v e r s i f i e d ex-port base g r e a t l y weakened i t s p o s i t i o n on the P a c i f i c Slope. The Company remained c o n t i n e n t a l i s t i n outlook; i t was not u n t i l the 1850s and 1860s that B r i t i s h and Canadian f i n a n c i a l c a p i t a l began to s e r i o u s -l y e n t e r t a i n the thought of developing Canada, through r a i l w a y b u i l d i n g , I b i d . , p. 308. o 70 i n t o the center of a great i m p e r i a l t r a d i n g system that ran from Europe to the Far East. (D) "Imperialism of Monopoly" The Hudson's Bay Company was a product of the m e r c a n t i l i s t age. I t was a monopoly t r a d i n g o r g a n i z a t i o n designed to minimize p h y s i c a l and commercial r i s k s and to maximize p r o f i t . But i n i t s quest f o r p r o f i t i t a l s o served the i n t e r e s t s of the B r i t i s h Empire by expand-ing trade and by adding to the wealth of the n a t i o n . The B r i t i s h State supported the Company's e x c l u s i v e t r a d i n g p r i v i l e g e s , and the fu r t r a d e , f o l l o w i n g i t s own m a t e r i a l s e l f - i n t e r e s t , provided the d r i v e and i n i t i a t i v e f o r the extension of B r i t i s h a u t h o r i t y across the North American continent. The Hudson's Bay Company acted as the i n -strument of t e r r i t o r i a l c o n t r o l and expansion, and the Royal Navy, on the P a c i f i c Coast, provided the necessary p r o t e c t i o n to maintain the commercial and s t r a t e g i c i n t e r e s t s of the B r i t i s h Empire. As Barry Gough has demonstrated, the d i s p l a y of Naval power during the Nootka Dispute of 1790 "marked merely the beginning of the Royal Navy's r o l e i n p r o t e c t i n g B r i t i s h commercial, p o l i t i c a l and e v e n t u a l l y s t r a t e g i c . , , „ 26 i n t e r e s t s . In the development of B r i t i s h i n t e r e s t s on the Northwest Coast, the Royal Navy played a paramount r o l e that has o f t e n been neglected by h i s t o r i a n s . Beginning w i t h the War of 1812 and f o r more than a century t h e r e a f t e r , successive B r i t i s h governments were remarkably c o n s i s t e n t i n pursuing p o l i c i e s • designed to pr o t e c t B r i t i s h commercial i n t e r e s t s and t e r r i t o r i a l claims i n what i s now the Canadian province of B r i t i s h Columbia.27 Barry M. Gough, The Royal Navy and the Northwest Coast of North Amer i c a , 1810—1914s A Study of B r i t i s h Maritime Ascendancy (Vancouver, U n i v e r s i t y of B r i t i s h Columbia Press, 1971), pp. x i i - x i v . 27 I b i d . , p. 2. 71 The c l o s e r e l a t i o n s h i p between the Hudson's Bay Company and the B r i t i s h government was a c h a r a c t e r i s t i c f e a t u r e throughout the Com-pany's h i s t o r y . This c l o s e r e l a t i o n s h i p was evident i n the Company's a b i l i t y to maintain i t s monopoly p o s i t i o n by securing the e x c l u s i v e l i c e n c e of trade west of Rupert's Land i n 1821 and i t s extension i n 1838; i n the arrangements f o r l e a s i n g the Russian t e r r i t o r y i n 1839; i n o b t a i n i n g the grant of Vancouver Island i n 1849, de s p i t e s p i r i t e d o p p o s i t i o n ; i n the i n v e s t i g a t i o n of 1857; and i n the many boundary disputes i n the Oregon t e r r i t o r y . The Hudson's Bay Company and the B r i t i s h government maintained c l o s e communications, p r i n c i p a l l y through the agency of Edward E l l i c e , who was both a member of the Company's London Committee and a member of the B r i t i s h Parliament, and up u n t i l the l a t e 1850s, the Company played an a c t i v e r o l e as the i n -strument of B r i t i s h i m p e r i a l p o l i c y . The Hudson's Bay Company found no d i f f i c u l t y i n combining m a t e r i a l s e l f - i n t e r e s t and p a t r i o t i s m . The Northwest Company, and a f t e r 1821, the Hudson's Bay Company dominated the whole of the P a c i f i c Northwest u n t i l the 1840s, and i n 28 so doing, the Company demonstrated the " i m p e r i a l i s m of monopoly". The Company was aware of the growing o p p o s i t i o n to i t s monopoly p o s i -t i o n ; i t was aware of the antagonism of Parliament. In order to a l -l e v i a t e some of the c r i t i c i s m , the Hudson's Bay Company was anxious to co-operate w i t h the B r i t i s h government i n extending trade through a p o l i c y of expansion and to show i t s enthusiasm f o r securing the Northwest Domain f o r the home government. The Company's i n t e r e s t i n see, Barry M. Gough, "The Hudson's Bay Company and the Imper-i a l i s m of Monopoly: A Review A r t i c l e " , B r i t i s h Columbia Studies, no. 18 (Summer 1973). 72 maintaining B r i t i s h sovereignty i n the Northwest d i d not s p r i n g s o l e -l y from a sense of p a t r i o t i s m . Reports forwarded to the London Com-mittee i n 1821 i n d i c a t e d that the u n p r o f i t a b i l i t y of the Columbia re g i o n was due to extravagance, low morale and i n e f f i c i e n t t r a d i n g methods, and not because of a l a c k of f u r resources. Governor Simpson d i d not recommend that the Company evacuate the r e g i o n , but argued that w h i l e the region would not produce great p r o f i t s , the Columbia region could serve to p r o t e c t the more p r o f i t a b l e trade to the north by checking the o p p o s i t i o n of American t r a d e r s . The st r a t e g y of the Hudson's Bay Company was one of defensive expansion. As Barry Gough wrote: In the case of the Hudson's Bay Company i n . t h e Snake Country (eastern Oregon, southern Idaho, northern Nevada, northwestern Utah) we f i n d that the Company employed whatever methods were s u i t a b l e and necessary to e s t a b l i s h and maintain paramountcy, and i t d i d so i n an area nominally authorized as a place of e x c l u s i v e trade by v i r t u e of the 1821 govern-ment l i c e n c e which gave i t a monopoly of the.Indian trade west of Rupert's Land.29 These methods ranged from a p o l i c y of "trapping c l e a n " or "scorched stream" to b u i l d i n g f o r t s and p r o h i b i t i n g the s a l e of snowshoes and su p p l i e s to American t r a d e r s and s e t t l e r s . The s t r a t e g y was designed to keep Americans at a distance from Fort Vancouver and the Columbia and to check the growth of American trade and settlement i n the re g i o n . The aggressiveness of the Hudson's Bay Company was l a r g e l y r e -sponsible f o r checking American commercial p e n e t r a t i o n i n the North-west and i n t u r n i n g American expansion i n the d i r e c t i o n of C a l i f o r n i a and Mexico. But the aggressiveness that the Company d i s p l a y e d was I b i d . , p. 71. 73 that of the conventional technique of f u r trade competition. Such a method, w h i l e c u r t a i l i n g American f u r t r a d i n g a c t i v i t i e s , proved to be i n a p p r o p r i a t e as a method f o r preventing American settlement i n the 1830s and 1840s. In 1831-32, Nathaniel Wyeth, the founder of the Oregon C o l o n i z a t i o n S o c i e t y a r r i v e d at Fort Vancouver w i t h 11 s e t t l e r s , and i n 1834, he returned w i t h 24 men, rep r e s e n t i n g the Columbia River 30 F i s h i n g and Trading Company. The i n f l u x of s e t t l e r s was small i n comparison to what was to occur during the "Oregon Fever" of the 1840s, but i t was s u f f i c i e n t to demonstrate the American i n t e r e s t i n the Columbia r e g i o n . The Hudson's Bay Company met t h i s s i t u a t i o n i w i t h a t -tempting to checkmate American expansion by a method novel to a f u r t r a d i n g o r g a n i z a t i o n : c o l o n i z a t i o n . In 1839 the Hudson's Bay Company e s t a b l i s h e d the Puget's Sound A g r i c u l t u r a l Company, a nominally independent company that was i n f a c t a s a t e l l i t e e n t e r p r i s e . The agents of the Puget's Sound Company were P e l l y , C o l v i l e and Simpson, and the ownership of stock was con-f i n e d to Hudson's Bay Company o f f i c i a l s and stockholders. The Puget's Sound A g r i c u l t u r a l Company was to serve both an economic and a p o l i -31 t i c a l purpose. Economically, i t was set up to o f f - s e t unbalanced cargoes and to provide a g r i c u l t u r a l s u p p l i e s to the f u r - t r a d i n g posts and to f u l f i l an agreement w i t h the Russians; p o l i t i c a l l y , i t was hoped that the Company "would provide the necessary reinforcement to E. E. R i c h , The Fur Trade and the Northwest to 1857 (Toronto, McClelland & Stewart, 1967), p. 278. 31 see, G a l b r a i t h , The Hudson's Bay Company as an Imperial F a c t o r , pp. 192-217. 74 32 other B r i t i s h claims to win the boundary of the Columbia R i v e r " . The l i c e n c e of e x c l u s i v e trade was not due to e x p i r e u n t i l 1842, but the Hudson's Bay Company decided to seek renewal i n 1837. A government that was f r i e n d l y to the i n t e r e s t s of the Company was i n power, and, being aware of the mounting o p p o s i t i o n to the monopoly o r g a n i z a t i o n , the Company ventured to ask f o r renewal e a r l y . To j u s t -i f y the request, P e l l y used the f a m i l i a r argument that the Company, as a monopoly, protected the Indians, provided moral and r e l i g i o u s i n -s t r u c t i o n , suppressed the trade i n s p i r i t s , and g e n e r a l l y , maintained peace. But P e l l y added a new p o i n t : that the Company intended to ex-tend i t s a g r i c u l t u r a l operation's around Fo r t Vancouver, to d i v e r s i f y i t s export trades and to encourage settlement so t h a t , as P e l l y s a i d , " B r i t i s h i n t e r e s t and B r i t i s h i n f l u e n c e may be maintained as paramount 33 i n t h i s i n t e r e s t i n g part of the Coast of the P a c i f i c " . Despite the Hudson's Bay Company's attempt at d i v e r s i f i c a t i o n and i t s i n t e r e s t i n the development of a g r i c u l t u r e and c o l o n i z a t i o n , the Company remained predominately a f u r t r a d i n g o r g a n i z a t i o n . The pro-f i t s were derived from the f u r trade and that i s where i t s i n t e r e s t s l a y . R e f e r r i n g to the Willamette colony, James Douglas wrote i n 1838: The i n t e r e s t s of the Colony and Fur Trade w i l l never harmonize, the farmer can f l o u r i s h only, through the p r o t e c t i o n of equal laws, the i n f l u e n c e of f r e e trade, the accession of respectable i n -h a b i t a n t s , i n short by e s t a b l i s h i n g a new order of th i n g s , which the f u r trade must s u f f e r by each . inn o v a t i o n . 3 2 I b i d . , p. 200. 33 c i t e d i n i b i d . , p. 196. 34 c i t e d i n i b i d . , p, 202. 75 The Company had no i n t e n t i o n of " e s t a b l i s h i n g a new order of t h i n g s " . The Oregon t e r r i t o r y was to act as a defensive bulwark f o r the more p r o f i t a b l e northern f u r trade, not as a f e r t i l e f i e l d f o r settlement. Free settlement was h o s t i l e to the i n t e r e s t s of the f u r trade and the Company was guided by t h i s f a c t : the supply of s e t t l e r s was c o n t r o l l e d by the Company, and the s e t t l e r s ( a c t u a l l y servants) were to remain subject to i t s c o n t r o l . As John G a l b r a i t h wrote: Beyond i t s a b o r t i v e e f f o r t to send c o l o n i s t s from Red R i v e r , the Company (Puget's Sound A g r i c u l t u r a l Company) d i d not promote settlement i n Oregon; on the c o n t r a r y , i t discouraged immigration, whether B r i t i s h or American. The Puget's Sound A g r i c u l t u r a l Company, organized avowedly to promote a p o l i t i c a l as w e l l as an economic purpose, soon was confined to the l a t t e r . A few Englishmen and Scots were sent to Ore-gon on Company ships to serve as farmers or shepherds, but they came as servants of the Company, not as f r e e s e t t l e r s . 3 5 The Hudson's Bay Company's defensive measures were unable to prevent the expansion of American settlement i n the Columbia r e g i o n . By 1843 Americans f a r out-numbered both the Canadians and the B r i -36 t i s h , and i n 1845 over 3000 American s e t t l e r s poured i n t o Oregon. The development of American c a p i t a l i s m was d r i v i n g the United States to the P a c i f i c Ocean, and they were not about to t o l e r a t e B r i t i s h c l a ims. American c a p i t a l i s t s had t h e i r own v i s i o n of a me r c a n t i l e empire based on Asian commerce. During the Oregon C r i s i s , W i l l i a m G i l p i n advised Congressmen, that the American a c q u i s i t i o n of Oregon would make the mouth of the Columbia R i v e r an o u t l e t f o r the export of American farm produce to A s i a , "an i n f i n i t e market of consumption". 35 I b i d . , p. 216. 3 6 Ri c h , The Fur Trade and the Northwest, p. 280-81. 76 Oregon would become the "maritime wing of the M i s s i s s i p p i V a l l e y upon 37 the P a c i f i c , as New England was i n the A t l a n t i c " . President Polk, i n h i s p r e s i d e n t i a l campaign of 1844, demanded a l l of the t e r r i t o r y 38 n o r t h to the 54 40 degree l a t i t u d e . B r i t i s h Naval power, however, and the f a c t that the Hudson's Bay Company was the e f f e c t i v e occupier of New Caledonia e v e n t u a l l y l e d to the agreement i n 1846 that extend-ed the i n t e r n a t i o n a l boundary along the 49th degree p a r a l l e l from the Rockies to the P a c i f i c . As Stanley Ryerson argued: 37 c i t e d i n Charles V e v i e r , "American Continentalism", i n J . Rogers H o l l i n g s w o r t h , (ed.), American Expansion i n the Late Nine- teenth Century (New York, H o l t , Rinhart & Winston, 1968), p. 20. 38 For a d i s c u s s i o n of the r o l e of the Royal Navy i n the Oregon C r i s i s , see Gough, The Royal Navy and the Northwest Coast, pp. 50-83. "The Royal Navy played a dual r o l e throughout the Oregon c r i s i s . In the f i r s t p l a c e , ships on the Northwest Coast acted i n v a r i o u s capa-c i t i e s upholding the i n t e r e s t s of the Hudson's Bay Company, main-t a i n i n g law and order, and a c t i n g as d e t e r r e n t s to any p o s s i b l e Ameri-can f i l i b u s t e r In the second aspect of i t s dual r o l e , the very f a c t of the Royal Navy's predominance i n the world...proved i n s t r u -mental i n keeping the peace. There i s l i t t l e reason to doubt that the Oregon compromise...saved the United States from a r e p e t i t i o n of d i s a s t e r s ' c h a r a c t e r i s t i c of the War of 1812. The o v e r a l l f a c t of B r i t i s h supremacy at sea, the operations of B r i t i s h war-ships at p o i n t s of s t r e s s such as Oregon, and a r t f u l B r i t i s h diplomacy i n European and American a f f a i r s enabled Great B r i t a i n to accomplish i t s o b j e c t i v e s to p r o t e c t c o l o n i a l t e r r i t o r i e s of her worldwide empire and to pro-v i d e s e c u r i t y f o r the homeland and f o r growing seaborne trade. As a r e s u l t of t h i s s t r e n g t h P o l k ' s ' b l u s t e r ' proved to be e x a c t l y t h a t " (p. 83). 77 The Oregon dispute was resolved by a compromise: B r i t i s h concern over markets for t h e i r manufactures i n the United States, and the large loans accorded to American c a p i t a l i s t s , had a r e s t r a i n i n g e f f e c t ; while United States expansionist's involvement i n war with Mexico (May 1846) and t h e i r seizure of over a t h i r d of i t s t e r r i t o r y led them to concentrate t h e i r a ttention i n the Southwest.39 Aft e r the loss of Oregon, the Hudson's Bay Company desired to consolidate t h e i r empire north of the i n t e r n a t i o n a l border. The 40 Royal Grant of Vancouver Island received by the Company i n 1849 served t h e i r i n t e r e s t s i n t h i s regard. By c o n t r o l l i n g settlement and col o n i z a t i o n , the Company hoped to develop Vancouver Island as a pro-41 t e c t i v e b a r r i e r for the northern fur trade. George Simpson himself 39 Ryerson, Unequal Union (Toronto, Progress Books, 1973), p. 231. 40 On January 13, 1849 Vancouver Island was ceded to the Hudson's Bay Company for an annual rent of seven s h i l l i n g s . In return the Company was to bring out c o l o n i s t s and s e l l land at a f a i r p r i c e ; the proceeds from the sale of land were to be used (less 10% for the Com-pany) to. promote and improve the Colony. I f no Colony was esta-blished a f t e r 5 years, the B r i t i s h government had the r i g h t to resume co n t r o l . For the terms of the Grant see, S c h o l e f i e l d & Howay, B r i - t i s h Columbia From the E a r l i e s t Times to the Present (Vancouver, 1914), I, pp. 676-680; Sage, S i r James Douglas and B.C., pp. 158-59. 41 For the motives of the Hudson's Bay Company see, John S. Galbraith, Hudson's Bay Company as an Imperial Factor, pp. 284-92. I 78 admitted that " i t w i l l unquestionably be more advantageous to the fur trade that i t (Vancouver Island) should be i n the hands of the Com-42 pany". The granting of the i s l a n d to the Hudson's Bay Company for 43 the purpose of co l o n i z a t i o n was not without opposition. L i e u t . Adam Dundas, i n a report to C o l o n i a l Secretary Grey p r i o r to the Grant, s u c c i n c t l y posed the contradiction between settlement and the fur trade: That t h i s powerful company have the a b i l i t y to form advantageous Settlements i n these unfre-quented parts, there i s not a doubt, but when t h e i r trade i s wholly c a r r i e d on with the Abori-gines i s i t to be supposed, that they would a i d i n the advancement of c i v i l i z a t i o n when from time immemorial i t has been proved that progress of the one has ever been at the expense of the other? and should the natives cease to e x i s t , why, t h e i r occupation i s gone. I t i s only a natural conclusion then to a r r i v e at that the e f f o r t s which the Hudson's Bay Company are putting forward to obtain either a d i r e c t or i n d i r e c t influence i n Vancouver Island are with the sole motive of protrac t i n g to as l a t e a period as possible a monopoly which they have so long enjoyed and which could not benefit the country, the only object of e s t a b l i s h i n g a Settlement i n such a distant q u a r t e r . . . ^ c i t e d i n i b i d . , p. 287. 43 The E a r l of Li n c o l n , for example, denounced the Hudson's Bay Company for 4% hours i n the B r i t i s h Parliament; see, Galbraith, Hud- son 's Bay Company as an Imperial Factor, pp. 283-307. Also see, Paul Knapland, "James Stephen on Granting Vancouver Island to the Hudson's Bay Company, 1846-1848", B r i t i s h Columbia H i s t o r i c a l Quarterly, V o l . XI (October,1945); R. E. Gosnell, " C o l o n i a l History, 1849-1871", i n Shortt & Doughty (eds.), Canada and I t s Provinces, Vol. 21, pp. 83-84; J . S. Galbraith, "The Hudson's Bay Company Under F i r e " , The Canadian  H i s t o r i c a l Review, Vol. XXX, no. 4 (December 1949), pp. 322-35; J . S. Galbraith, " F i t z g e r a l d versus the Hudson's Bay Company: The Founding of Vancouver Island", B r i t i s h Columbia H i s t o r i c a l Quarterly (July-October, 1952). c i t e d i n Harold G r i f f i n , B r i t i s h Columbia: The People's Early  Story (Vancouver, Tribune Publishing Company, 1958), p. 17. 79 The Hudson's Bay Company was able to muster s u f f i c i e n t p o l i t i c a l sup-po r t , however, to overcome any o b j e c t i o n s to t h e i r p roposal. The C o l o n i a l O f f i c e , under the i n f l u e n c e of E a r l Grey, was r e l u c t a n t to shoulder the expenses of c o l o n i z a t i o n d i r e c t l y i n an age of l a i s s e z - f a i r e , and thus chose the l a r g e f u r - t r a d i n g o r g a n i z a t i o n to c a r r y out i t s i m p e r i a l design. As f a r as the Hudson's Bay Company was concerned: Should c o l o n i z a t i o n succeed, they would f i n d t h e i r reward...in b r i n g i n g out s e t t l e r s , i n f u r n i s h i n g them s u p p l i e s , i n securing the best lands, and i n developing the c o a l mines. So f a r as the I s l a n d alone was concerned, they could undoubtedly make more out of i t i n t h i s way than i n ho l d i n g i t as a f u r - t r a d e preserve. On the other hand, should c o l -o n i z a t i o n f a i l , they would not only have the country a l l q u i e t l y to themselves again, but they might c o l -l e c t from the Crown w e l l n i g h whatever sum t h e i r con-sciences would permit them to charge as expenses of the f a i l u r e . ^ As i t turned out, the Company, while not making e x o r b i t a n t p r o f i t s , d i d manage to p r o f i t from settlement, but more impo r t a n t l y , i t s con-t r o l of c o l o n i z a t i o n d i d prevent Vancouver I s l a n d from becoming a base of o p p o s i t i o n , by e i t h e r American or_ B r i t i s h commercial i n t e r -e s t s , against i t s mainland f u r t r a d i n g operations. Within the next decade i t became q u i t e evident t h a t , d e s p i t e the p u b l i c pronouncements, the Hudson's Bay Company obstructed and delayed settlement and c o l o n i z a t i o n . H. H. Bancroft, H i s t o r y of B r i t i s h Columbia, V o l . XXXII (San Fr a n c i s c o , The H i s t o r y Company, 1887), pp. 234-35. 80 (E) Colonial-Company Rule: 1849-1858  ( i ) Land The c o n d i t i o n s f o r the d i s p o s a l of land set by the Hudson's Bay Company under i t s c o l o n i z a t i o n scheme were designed to c o n t r o l and l i m i t settlement r a t h e r than to e f f e c t an o r d e r l y process of growth. The Company, by monopolizing a l l of the best lands f o r i t s e l f , and, by imposing severe r e s t r i c t i o n s on the ownership of land, made I t im-p o s s i b l e f o r l a r g e numbers of immigrants to own land. The Hudson's Bay Company a l l o c a t e d a l l of the best lands to e i t h e r i t s e l f , i t s s a t e l l i t e , the Puget's Sound A g r i c u l t u r a l Company, or to the high-ranking o f f i c i a l s and o f f i c e r s of the Company. The p o s s i b l e f u t u r e t e r m i n a t i o n of the Royal Grant, and the Company's concern over "possessory r i g h t s " which had been of great importance to the Com-pany during the Oregon dispute prompted the Hudson's Bay Company to e i t h e r c l a i m or to purchase a l l of the land around F o r t V i c t o r i a . In 46 1851 Richard Blanshard, the f i r s t Governor of Vancouver I s l a n d , complained to the C o l o n i a l O f f i c e that Douglas was cla i m i n g " n e a r l y 30 square m i l e s of the best part of the I s l a n d " and that the Hudson's Bay Company had "no i n t e n t i o n of pay i n g " . ^ 7 The exact extent of the s o - c a l l e d "Fur Trade Reserve" on Vancouver I s l a n d v a r i e d from a low of s i x square m i l e s t o , as Blanshard a s s e r t e d , 30 square m i l e s , but as E. E. Ri c h s a i d : "...the f u r trade reserve, even when c l o s e l y de-48 f i n e d , included a l l the water-front and adjacent areas". Blanshard 46 Blanshard was Governor f o r only 17 months. He was succeeded by James Douglas. 47 c i t e d i n W. Kaye Lamb, "The Governorship of Richard Blan-shard", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . XIV (1950), p. 26. 48 E. E. R i c h , The H i s t o r y of the Hudson's Bay Company, 1670-1870, 3 V o l s . (London, Hudson's Bay Record S o c i e t y , 1858/59), V o l . I l l , p. 758. 81 wrote to E a r l Grey that the "whole tendency of the system pursued by the Hudson's Bay Company" was "to exclude f r e e s e t t l e r s , and reserve 49 the I s l a n d , e i t h e r as an enlarged Post of t h e i r own or a desert". By the end of 1854, according to a census of Vancouver I s l a n d , the Hudson's Bay Company had farms at Beckley, North Diary and Up-lands, comprising a t o t a l of 2,171 acres; and the Puget's Sound Com-pany had farms at Constance Cove, Esquimalt, Maple Point and View-p o i n t , t o t a l l i n g 2,100 acres. Between 1852 and 1855 the Hudson's Bay Company had bought a f u r t h e r 6,200 acres and the Puget's Sound Com-pany a f u r t h e r 2,574 acres. As Rich s a i d : These were very s u b s t a n t i a l p o r t i o n s of the t o t a l of 11,455 acres which had been s o l d since that date, and although there were f o r t y - t h r e e " s e t t l e r s " by 1855 most of these were connected w i t h the Company, and the only n o t i c e a b l e increase i n popu l a t i o n was due to the Company sending out a f u r t h e r three hundred or so during the p e r i o d , many of them on behalf of the Puget's Sound Company.51 Those d i r e c t l y r e l a t e d to the Company a l s o owned l a r g e e s t a t e s : John Work held 583 acres and Pemberton, 200 acres; Tod had a farm at Oak Bay and Cameron owned a t r a c t of land at Belmont; and Douglas, who was reputed to be the l a r g e s t land owner by the 1860s, operated the H y c i t e d i n Lamb, "The Governorship of Richard Blanshard", op. c i t . , p. 33. W. Kay Lamb, "The Census of Vancouver I s l a n d , 1855", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . IV, no. 1 (January, 1940), pp. 51-57. R i c h , Hudson's Bay Company, I I I , p. 770. 82 F a i r f i e l d E s t a t e , which covered a t o t a l of 418 acres. Thus, while the Hudson's Bay Company was supposedly engaged i n a c o l o n i z a t i o n scheme, i t was apparent a f t e r the f i r s t few years of C o l o n i a l -Company-Rule that the Company, and those a s s o c i a t e d w i t h i t , were v i r t u a l l y the only " c o l o n i s t s " . Land was not widely dispersed. P e r s p e c t i v e c o l o n i s t s and s e t t l e r s , i f they were not brought out under contract or as indentured servants, were forced to look f o r arable land at a considerable d i s t a n c e from the main area of s e t t l e -53 ment. This was not the only s i t u a t i o n , however, that discouraged settlement. The D i r e c t o r s of the Company decided to charge one pound M. Macfie a l l e g e d that j u s t a f t e r Douglas became Governor of Vancouver I s l a n d , he suggested to the C o l o n i a l O f f i c e that the thousand acres set aside as a "Governor's Reserve" be thrown open f o r purchase by the p u b l i c . "whether i t was by design or coincidence i s not here a s s e r t e d , but t h i s land was bought almost immediately by His Exc e l l e n c y and the Surveyor-General, at a mere nominal f i g u r e . The governor, i t w i l l be admitted, took d i s i n t e r e s t e d and p u b l i c ground, to some purpose, i n h i s appeal to the Secretary f o r the Colo n i e s ; f o r w h i l e poor immigrants received no b e n e f i t from t h i s concession of the home a u t h o r i t i e s , Mr. Douglas and h i s f r i e n d enriched themselves immensely by the o p e r a t i o n " (Macfie, Vancouver I s l a n d and B r i t i s h  Columbia (London, 1865), pp. 313-14). 53 Macfie wrote i n 1865: "Emigrants coming at t h i s e a r l y stage of c o l o n i a l growth, ignorant of the amount of land held by companies and p r i v a t e i n d i v i d u a l s f o r a considerable p e r i o d , expect, perhaps, to be able to s e l e c t f o r purchase s e c t i o n s w i t h i n easy d i s t a n c e of V i c t o r i a on merely nominal terms; and are consequently s u r p r i s e d to f i n d farms, p a r t i a l l y under c u l t i v a t i o n , valued at a f i g u r e so much higher than they had a n t i c i p a t e d . The Hudson's Bay and Puget's Sound Companies, w i t h c e r t a i n o f f i c i a l s of those companies,• i n t h e i r p r i v a t e c a p a c i t y , own i n d i f f e r e n t d i s t r i c t s an aggregate of at l e a s t 15,000 acres of land, the p r i c e of which, s e v e r a l years pre-vious to the present law of pre-emption being passed, was one pound per acre. (Vancouver I s l a n d and B r i t i s h Columbia, pp. 190-91). 83 per acre f o r c o l o n i a l l a n d , w h i l e i n the United States land was s e l -l i n g f o r one d o l l a r per acre-, and i n Oregon, i t was given away f r e e 54 a f t e r 1850. Furthermore, the minimum block of land purchasable was 20 acres, and purchasers of l a r g e acreages were r e q u i r e d , at t h e i r own expense, to b r i n g out f i v e s i n g l e men or three married couples. A l l of these f a c t o r s tended to act as a guarantee against independent c o l o n i z a t i o n . ( i i ) A g r i c u l t u r e The Hudson's Bay Company prevented the widening of the domestic market and extended the phase of merchant monopoly c o n t r o l by ob-s t r u c t i n g the t r a n s i t i o n of c a p i t a l and men i n t o a g r i c u l t u r e . The r e s t r i c t i v e impact of monopoly blocked the development of a market f o r a g r i c u l t u r a l produce and a market.for a g r i c u l t u r a l surplus l a b o r ; and, by not p r o v i d i n g a g r i c u l t u r e w i t h cheap farm implements and con-summer goods, and by f i x i n g the r e l a t i o n s of production i n an a r c h a i c  mold of extra-economic co e r c i o n , the Company forced a g r i c u l t u r e i n t o a s e l f - s u f f i c i e n c y resembling feudalism. The c a p i t a l investment i n a g r i c u l t u r e was l i m i t e d to the i n t e r -e s t s of the f u r trade, and i t s development was retarded by the fe u d a l arrangements surrounding the farming operations. A g r i c u l t u r e was not organized along c a p i t a l i s t l i n e s . The e a r l y farming developments i n The Company o f f e r e d the land on terms which could be a t t r a c -t i v e only to Englishmen wishing to become gentlemen farmers" (Douglas MacKay, The Honourable Company: A H i s t o r y of the Hudson's Bay Company (New York, Bobbs - M e r r i l Co., 1936), p. 234. see, R. E. G o s n e l l , " H i s t o r y of Farming", i n Shortt & Doughty ( e d t s . ) , Canada and I t s Prov i n c e s , V o l . 22. For a d i s c u s s i o n of C o l o n i a l land settlement p o l i c y a f t e r 1858, see, Robert E. C a i l , Land, Man, and the Law: The D i s p o s a l of Crown Lands i n B r i t i s h Colum- b i a , 1871-1913 (Vancouver, U n i v e r s i t y of B r i t i s h Columbia Press, 1974). 84 the Columbia r e g i o n , f o r example, followed the f e u d a l system of farming "on halves"; the Puget's Sound Company would provide the stock and seed and then take one-half of the increase i n produc-t i o n . The Company's " b a i l i f f farms" on Vancouver I s l a n d were s i m i -l a r l y organized along f e u d a l l i n e s . Each of the four farms i t acquired was placed under the s u p e r v i s i o n of a "gentleman b a i l i f f " who put up s e c u r i t y , r e c e i v e d a small s a l a r y and shared whatever p r o f i t s h i s farm earned. Each b a i l i f f r e c e i v e d f r e e housing and f r e e food. The Puget's Sound A g r i c u l t u r a l Company paid h i s l a b -ourers 17 pounds a year w i t h t h e i r keep, and promised them at the end of f i v e years f a i t h f u l s e r v i c e , holdings of twenty or more acr e s , valued at one pound an acre. As conceived, the p l a n was  to-produce a l o c a l squirearchy and a c l a s s of s m a l l  landholders.57 Captain Edward Langford, the b a i l i f f at the Colwood Farm, " l i v e d the 58 l i f e of an E n g l i s h country gentleman". The labour supply f o r the Company's a g r i c u l t u r a l operations was secured by importing E n g l i s h farm la b o u r e r s . These l a b o u r e r s , how-ever, were not wage-earners i n the c a p i t a l i s t sense, but were subject to the extra-economic c o e r c i o n of the Hudson's Bay Company. M. Ormsby wrote: As f o r the employees of the Puget's Sound A g r i -c u l t u r a l Company's farms, they were among the most severe of Douglas's c r i t i c s . R eceiving wages so much lower than those paid i n American R i c h , The Fur Trade i n ' t h e Northwest to 1857, pp. 279-80. ^ M. Ormsby, B r i t i s h Columbia, p. 102; f o r a b r i e f account of the " b a i l i f f farms" a l s o see R i c h , Hudson's Bay Company, V o l . I l l , pp. 759-60. I b i d . , p. 103. 85 settlements on the other side of Puget Sound, they f e l t e x p l o i t e d , and the f a i r l y r i g i d c l a s s s t r u c t u r e i n the Colony cut them o f f from most of the s o c i a l l i f e of the gentry. The importation of labourers and farm b a i l i f f s was designed to keep the resources of the Colony e x c l u s i v e l y i n the hands of the Company. As Matthew Macfie s a i d : "No s e t t l e r was encouraged to remain i n the i s l a n d i n the f i r s t i n s t a n c e , unless introduced under the auspices 60 of the Company". Thus, as one h i s t o r i a n noted, the Hudson's Bay Company scheme f o r farming "appeared as part of a p r o p r i e t a r y d e v e l -61 opment r a t h e r than as a c o l o n i z a t i o n scheme". ( i i i ) C a p i t a l Investment The major p o r t i o n of the p r o f i t s derived from the f u r trade i n 62 the Northwest were siphoned o f f to London, some of which l a t e r r e -62a turned to Canada i n the form of p o r t f o l i o investments. The econo-mic surplus that was appropriated by the monopoly was not ploughed back i n t o i t s own e n t e r p r i s e , nor to any great extent, i n t o new 59 I b i d . , p. 126. 60 Macfie, Vancouver I s l a n d and B r i t i s h Columbia, p. 62. ^ R i c h , Hudson's Bay Company, V o l . I l l , p. 760. 62 The p r o f i t s from the Company's posts west of the Rockies and north of the 49th degree p a r a l l e l , from the 1840s onward, averaged year a f t e r year about 30,000 pounds (Rich, Hudson's Bay Company, V o l . I l l , p. 749). In other words, about one-half of the Hudson's Bay Company's annual p r o f i t of 60,000 to 70,000 pounds was derived from the area bounded by the present day borders of B r i t i s h Columbia. 62a see s e c t i o n (F) of t h i s chapter, "The Fur Trade and C a p i t a l Accumulation". 86 productive e n t e r p r i s e s . The Hudson's Bay Company was a m e r c a n t i l e c o r p o r a t i o n based on the surface e x p l o i t a t i o n of a s t a p l e product; the Company's p r o f i t s were e x t r a c t e d from the f u r trade and a l l other a c t i v i t i e s were e s s e n t i a l l y s u b s i d i a r y to i t s operation. Nevertheless, i n order to minimize the changes i n the p a t t e r n of the fu r t rade, the Company d i d attempt to e s t a b l i s h and develop a u x i l i a r y trades. Throughout the nineteenth century the f u r f r o n t i e r was mov-ing s t e a d i l y north and west, and w i t h i t , the b a s i s of the p r o f i t a b l e fu r trade. Edward E l l i c e i n 1857 placed the southern boundary of the fu r trade at 60 degrees North. I t was i n order to minimize these changes that the Company sought to develop trades i n lumber, f i s h and c o a l . The C a l i f o r n i a n gold rush of 1849 g r e a t l y increased the demand fo r lumber and a g r i c u l t u r a l products. A f t e r 1849, Douglas and C o l -v i l e saw the C a l i f o r n i a n market, as w e l l as the Hawaiian market, which had grown w i t h the increase i n sugar production, as a new op-p o r t u n i t y f o r d i v e r s i f y i n g and expanding trade. In 1848 the Hudson's Bay Company erected a sawmill at M i l l s t r e a m on Vancouver I s l a n d , the f i r s t sawmill of what i s now B r i t i s h Columbia, and i n 1849 a cargo of 8,238 f e e t of lumber, at a p r i c e of $80 per 1,000 f e e t , was shipped 63 to San Fr a n c i s c o . During the next few years and before the m i l l stopped operating i n 1855, "...a considerable number of shipments 64 went to San Fra n c i s c o and a l s o to Hawaii..." This was not the f i r s t time that f o r e s t products had been exported from the coast, but W. Kaye Lamb, " E a r l y Lumbering on Vancouver I s l a n d , Part I 1844-1855", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . I I , no. 1 (January 1938), p. 39. 6 4 T L ' J I b i d . 87 nonetheless, the sawmill b u i l t by the Hudson's Bay Company at M i l l -stream i n 1848, as w e l l as a second water-powered m i l l b u i l t by the Company at Nanaimo i n 1853, represented the beginning of the timber trade i n B r i t i s h Columbia. The employees of the Hudson's Bay Company a l s o invested i n new e n t e r p r i s e s . The p r i v a t e accumulations of Chief Factors and Chief Traders were q u i t e c o n s i d e r a b l e : the average amount d i s t r i b u t e d under the Deed P o l l between 1840 and 1857 was 26,229 pounds. This 65 amount represented 40 percent of the Company's annual p r o f i t . The Vancouver's I s l a n d Steam Sawmill, f o r example, was s t a r t e d i n 1851. The i n i t i a l c a p i t a l was f o r 2000 pounds, i n 100 pound shares, and a l l of the o r i g i n a l s u b s c r i b e r s were Company employees: James Douglas, David D. Wishart, J . D. Pemberton, Roderick F i n l a y s o n , 66 John Work, e t c . This s o r t of investment, however, was the excep-t i o n to the r u l e . Employees of the Hudson's Bay Company, on r e t i r e -ment or during t h e i r c a r e er, tended to i n v e s t t h e i r money i n land or s m a l l - s c a l e r e t a i l o p e r a t i o n s , or f o r that matter, to leave t h e i r 6 7 earnings w i t h the Company i n London f o r reinvestment. R i c h , Hudson's Bay Company, V o l . I l l , p. 818. 66 The i n i t i a l c a p i t a l proved to be too s m a l l , however, and the Company soon ran i n t o f i n a n c i a l t r o u b l e ; i n 1857 the m i l l was s o l d to James Duncan of V i c t o r i a f o r 2,000 pounds. Lamb, " E a r l y Lumbering on Vancouver I s l a n d , 1844-1855", op_. c i t . , pp. 42-46. 6 7 "In a d d i t i o n to i t s own balances the Company had the savings of i t s s t a f f to i n v e s t , and i t allowed i n t e r e s t (normally four per cent) f o r wages or shares of the p r o f i t of trade l e f t i n i t s hands". R i c h , Hudson's Bay Company, V o l . I l l , p. 819, 88 Coal mining was another area i n which the Hudson's Bay Company invested c a p i t a l . Coal was discovered at Beaver Harbour on Vancouver Island i n the mid 1830s, but i t was not u n t i l a f t e r the 1840s and the rapid growth of steam navigation i n the P a c i f i c that the Company was encouraged to develop t h i s staple product. In 1848 the Company con-tracted to supply coal to the P a c i f i c Mail Steam Ship Company, that was operating three steamers between Panama and the Oregon Coast. But the Company hoped to p r o f i t by not only supplying p r i v a t e s h i p -ping firms, but also by supplying the Royal Navy. The B r i t i s h Navy began to see the s t r a t e g i c s i g n i f i c a n c e of the coal deposits on Van-couver Island about the same time as the Hudson's Bay Company began to investigate the commercial p o s s i b i l i t i e s . Rear Admiral Seymour wrote i n 1847 that the deposits of good coal would add greatly to The future value of the B r i t i s h possessions on the Northwest Coast and contribute the means to extend t h e i r commerce, and to f a c i l i t a t e t h e i r defence, as C a l i f o r n i a and the neighbouring countries become of niogg consequence, and acquire a d d i t i o n a l population. The Admiralty recommended that the coal mines be reserved for the p u b l i c i n t e r e s t and that the Crown should operate and supervise pro-duction. But despite the Admiralty's objection to private e x p l o i t a -t i o n of the coal, the Hudson's Bay Company received the Royal Grant of Vancouver Island i n 1849, and thus, j u r i s d i c t i o n over a l l lands 69 and minerals. The Navy's concern was not unfounded; within the 68 c i t e d i n Barry M. Gough, The Royal Navy and the Northwest  Coast of North America, p. 100. 69 For a discussion of the r e l a t i o n between the Royal Navy and Vancouver Island coal see, i b i d . , pp. 98-103. 89 next few years they were forced to r e l y on other sources for t h e i r coal supplies, though from time to time the Navy did purchase sup-p l i e s from the Company. One reason given for t h i s was the high prices charged the Navy for Vancouver Island c o a l . Rear Admiral Hornby wrote i n 1851: Eventually Vancouver Island promises a p l e n t i -f u l supply but owing to the d i f f i c u l t y and uncer-t a i n t y of working the mines, and the exorbitant p r i c e of 50s per ton demanded by the Hudson's Bay Company, i t i s not desirable to look to that quar-ter at present.7° P r i o r to r e c e i v i n g the Royal Grant of Vancouver Island, the Hudson's Bay Company had argued that they were not intere s t e d i n f i n a n c i a l gain, but rather i n using the p r o f i t s of any coal mining venture i n the i n t e r e s t s of promoting the good of the Colony. The Company's concern for the good of the Colony, however, d i d not pre-vent them from securing the Nanaimo c o a l - f i e l d f o r themselves. In 1850 coal was discovered at Nanaimo and i n 1853 Douglas sent Pem-berton, the Company's surveyor, to map out the promising c o a l seam there. Douglas was unsure about the r i g h t of mineral r o y a l t i e s , and, as he had already transferred the miners from Fort Rupert (Beaver c i t e d i n i b i d . , p. 103. 90 Harbour), 7^" Douglas made sure of buying a l l the coal-bearing land i n the area. The Nanaimo Coal Company, a subsidiary to the Hudson's Bay Company, was formed to manage the coal mining operations. Doug-las ' s purchase of the 6,000 acres at Nanaimo was severely c r i t i c i z e d by his colleagues i n the fur trade at the time; t h i s c r i t i c i s m , how-ever, proved to be unwarranted. The Hudson's Bay Company, who paid 6,000 pounds for the property, sold the "Nanaimo Estate" to a group of English C a p i t a l i s t , associated under The Vancouver Coal Mining 72 and Land Company, Limited, for 25,000 pounds cash and a mortgage of 15,000 pounds. 7 3 In 1849, the Hudson's Bay Company brought some Scots miners out from B r i t a i n to work the coal seams at Fort Rupert. The small party of miners was headed by John Muir. From the beginning there was c o n f l i c t between the miners and the Company. The miners were discontented with the f e u d a l i s t i c r e s t r i c t i o n s imposed by the Com-pany; they charged that housing and working conditions were not up to the agreement. In 1850 Andrew Muir, with an "echo of charism", c r i t i c i z e d the conditions. The c l e r k of the Hudson's Bay Company i n charge put two of the minders, including Muir, i n irons f o r s i x days on a d i e t of bread and water. Four others were imprisoned for two days (see W. Kaye Lamb, "The Governship of Richard Blanshard", op. c i t . , pp. 8-11). This marked merely the beginning of labour s t r i f e i n the c o a l f i e l d s of Vancouver Island, (see Jack Scott, Sweat and Struggle, Working Class Struggles i n Canada, Vol. I:  1789-1899 (Vancouver, New Star Books, 1974), pp. 149-184). 72 " C a p i t a l 100,000 pounds i n 10,000 shares of 10 pounds each. Dir e c t o r s , Hon. Mr. J u s t i c e Halibuton, George Campbell, C. W. W. F i t z w i l l i a m , Josephy Fry, James V. H. Irwin, and Prideaux Selby. Resident manager at Nanaimo i n 1863, C. J . N i c o l ; and i n 1877, Mark Bate". Hubert Howe Bancroft, History of B r i t i s h Columbia, Vol. XXXII, p. 569. Rich, Hudson's Bay Company, Vol. I l l , p. 778. 90 a In ge n e r a l , the c a p i t a l invested i n the r e g i o n by the Hudson's Bay Company tended to flow i n t o the a c q u i s i t i o n of re n t - b e a r i n g land or i n t o the t r a d i t i o n a l m e r c a n t i l e a c t i v i t i e s such as r e t a i l opera-t i o n s , f r e i g h t s e r v i c e s and land s p e c u l a t i o n , and the remainder went to support the l u x u r i o u s l i v i n g of high-ranking Company o f f i c i a l s through the c o n s t r u c t i o n of urgan and r u r a l residences and the em-ployment of servants. These investments d i d not represent a long term commitment of f i x e d c a p i t a l , nor d i d they represent a long term commitment to the development of the re g i o n . The f u r trade remained the major source of p r o f i t f o r the Hudson's Bay Company: a l l other a c t i v i t i e s were s u b s i d i a r y . The c a p i t a l requirements of the f u r trade i n v o l v e d the p r o v i s i o n of short-term, merchant c a p i t a l , i . e . , the r a t i o of f i x e d to c i r c u l a t i n g c a p i t a l was very low. Merchant c a p i t a l was w e l l adapted to gathering up and exchanging surface products, and i t was t h i s type of c a p i t a l that dominated the economic r e l a t i o n s of the re g i o n . ( i v ) "Family-Compact-Company" The independent and c a p i t a l i s t - m i n d e d s e t t l e r s , at an e a r l y date, came i n t o c o n f l i c t w i t h the Hudson's Bay Company. The s e t -t l e r s , l i k e the employees, were completely dependent upon the Com-pany f o r s u p p l i e s and f r e i g h t s e r v i c e s . While imposing no r e s t r i c -t i o n s upon t r a d e r s , the Company, q u i t e understandably, refused to c a r r y the goods of would-be competitors. There were no independent merchants on Vancouver I s l a n d u n t i l 1858. The e n t i r e p o p u l a t i o n had to r e l y on the Hudson's Bay Company f o r a l l n e c e s s i t i e s . Independ-ent s e t t l e r s were charged 300 percent on the cost of s u p p l i e s , whereas the c h i e f o f f i c i a l s of the Company pa i d 33 percent, and i n -91 74 f e r i o r o f f i c e r s 50 to 100 percent advance on the cost. The Royal Navy was like-wise charged the f u l l p r i c e on goods and provisions. The Hudson's Bay Company could also p r o f i t from settlement at the expense of the small number of independent s e t t l e r s by other means. In 1850 James Douglas was instructed to pay 4,000 pounds for the purposes of the Colony. The Governor proceeded to use 2,000 pounds of t h i s amount to extinguish the land claims of the Indians around V i c t o r i a . This was paid, however, i n goods charged to the Colony at three times the landed cost. 7"* The r e s t of the money was used i n the construction of a coastal road l i n k i n g V i c t o r i a to the Company's other claims. Before the end of Company-Colonial rule i n 1858, however, the Company was able to p r o f i t one more time from i t s venture i n c o l -onization: t h i s was through the payment for the "resumption" of the i s l a n d by the Crown, The price-tags for recompensing the Hudson's 74 Macfie, Vancouver Island and B r i t i s h Columbia, p. 311. Another p r a c t i c e of the Hudson's Bay Company which created c o n f l i c t between the Company and the independent s e t t l e r s was the so - c a l l e d "truck system". James Dean, a one-time employee of the Company, wrote i n 1878: "The 'truck system', i . e . , the paying for labour etc. i n goods i n l i e u of coin also was a source of discontent and annoy-ance: rendered s e t t l e r s subservient to a humiliating degree upon the Hudson's Bay Company. It i s not astounding that the Colonization of the Island f a i l e d to prove a success" (James Dean, The S e t t l e - ment of Vancouver Island ( V i c t o r i a , 1878, MS i n the Public Archives of B r i t i s h Columbia), c i t e d i n , Derek Pethick, V i c t o r i a : The Fort (Vancouver, M i t c h e l l Press, 1969), p. 112). Lamb, "The Governorship of Richard Blanshard", p. 27; Rich, Hudson's Bay Company, pp. 758-59. 92 Bay Company for i t s possessory r i g h t s and expenditures on Vancouver Island varied between the 225,699 pounds claimed by the Company and the 46,524 pounds offered by the C o l o n i a l O f f i c e . The amount that was f i n a l l y agreed upon was for 57,500 pounds: 32,500 pounds, plus the 25,000 pounds that had already been paid. What was of great s i g n i f i c a n c e to the Company, however, was the fact that the "grants of land sold by the Company p r i o r to the 1st of January, 1862, were 7 6 to stand including of course sales to i t s e l f " . "In the Colony the Agreement was received with disgust". 7 7The Report of the Committee on Crown Lands of Vancouver Island of 1863-64 complained "that a l -though by the charter of grant the Company was only e n t i t l e d to one-tenth of the gross proceeds i t had taken more than h a l f of them as 78 well as one-tenth of the remaining portion". 76 Rich, The Hudson's Bay Company, Vol. I l l , p. 778. 7 7 L i o n e l H. Laing, "The Family-Company-Compact", The Washing- ton H i s t o r i c a l Quarterly, Vol. XXII, no. 1 (January, 1931), p. 127. 78 Ib i d . The agreement to the "repurchase" of Vancouver Island, however, turned out to be a mere shadow of the massive give-away that was involved i n the transfer of Rupert's Land to the Dominion of Canada. In the agreement of 1869, the Hudson's Bay Company received 300,000 pounds i n cash; land (not to exceed 50,000 acres) i n the v i c i n i t y of i t s trading posts; and a reservation of one-twentieth of the entire region i n the f e r t i l e b e l t from the Red River to the Rocky Mountains (see, Chester Martin, "Dominion Lands", i n W. A. Mackintosh & W. L. G. Joerg (edts.), Canadian F r o n t i e r s of S e t t l e - ment, Vol. II (Toronto, MacMillan, 1938), pp. 217-225. The revenue from the sale of land alone, between 1893 and 1912, amounted to $15,627,944 (Myers, A History of Canadian Wealth (Tor-onto, James Lewis & Samuel, 1972), p. 148); by 1952 the Company s t i l l held t i t l e to 100,000 acres and the mineral r i g h t s on s l i g h t l y more than four and one-quarter m i l l i o n acres (A B r i e f History of the  Hudson's Bay Company, HBC, 1958, p. 42). 93 What was even more of a grievance as f a r as the independent s e t t l e r s were concerned, however, was the f a c t that the Company completely c o n t r o l l e d State Power. Richard Blanshard, the f i r s t Governor of Vancouver I s l a n d , was i n s t r u c t e d to set up a C o u n c i l and an Assembly of f r e e h o l d e r s , but discouraged by the Colony's pro-spects under the domination of the Hudson's Bay Company, he f a i l e d to c a r r y out these d i r e c t i v e s . Blanshard resigned i n l a t e 1850, but before he departed he d i d set up a p r o v i s i o n a l c o u n c i l to ad-m i n i s t e r the a f f a i r s of the Colony. The s e n i o r member of the coun-c i l was James Douglas, Chief Factor of the Hudson's Bay Company; the f o l l o w i n g year, Douglas was appointed Governor. A l l of the independent s e t t l e r s signed a p e t i t i o n r e g r e t i n g Blanshard's r e s i g n a t i o n and t h e i r concern over Douglas's appoint-79 ment. But the p e t i t i o n f a i l e d to have any e f f e c t : Douglas con-t i n u e d to govern, w i t h the support of the C o l o n i a l O f f i c e and w i t h -out the a i d of an assembly. In 1854, however, the Law O f f i c e r s of 79 The memorial declared: "...understanding that the govern-ment has been committed to a c h i e f f a c t o r of the Hudson's Bay Com-pany being, as i t i s , a great t r a d i n g body, must n e c e s s a r i l y have i n t e r e s t s c l a s h i n g w i t h those of independent c o l o n i s t s . Most matters of a p o l i t i c a l nature w i l l cause a contest between... the Company and the c o l o n i s t s . Many matters of a j u d i c i a l nature a l s o w i l l , undoubtedly, a r i s e i n which the c o l o n i s t s and the Company... w i l l be contending p a r t i e s , or the upper servants and the lower servants of the Company w i l l be arrayed against each other. We beg to express i n the most emphatical and p l a i n e s t manner... impar-t i a l d e c i s i o n s cannot be expected from a Governor, who i s not only a member of the Company, sharing i t s p r o f i t s . . . b u t i s a l s o charged as t h e i r c h i e f agent w i t h the s o l e r e p r e s e n t a t i o n of t h e i r t r a d i n g i n t e r e s t s i n t h i s i s l a n d and the adjacent c o a s t s . . . " ( c i t e d i n Sc o t t , Sweat and Struggle , p. 154). 94 the Crown ruled that an assembly must be e s t a b l i s h e d 8 U a n d a r e l u c -tant C o l o n i a l O f f i c e ordered Douglas to summons a L e g i s l a t i v e Assembly. The Col o n i a l O f f i c e was i n i t i a l l y perplexed by the r u l -ing; i t was led to believe, following the information provided by Douglas, that there were an i n s u f f i c i e n t number of freeholders to warrant the formation of an assembly. The London committee of the Hudson's Bay Company, however, driven by t h e i r own motives, r e -assured the C o l o n i a l O f f i c e : The Company feared that their grant of Van-couver Island might be revoked because of t h e i r f a i l u r e to colonize i t , and they f o r e -saw that an assembly could serve as a tangible proof of settlement and a r e f u t a t i o n of t h e i r c r i t i c s . C o l v i l l e , Governor of the Company, therefore urged the Col o n i a l O f f i c e to summon a seven-man assembly... As i t turned out, the Hudson's Bay Company had nothing to fear: the c r i t i c i s m of t h e i r opponents was softened and power remained i n the hands of "The Family-Company-Compact". Compelled to take some action, Douglas placed the matter be-fore h i s c o u n c i l . The franchise was extended to a l l freeholders Douglas had voiced h i s d i s l i k e of the whole matter of an assembly, and had postponed i t s establishment, o u t l i n i n g h i s rea-sons i n dispatches to the Colonial O f f i c e . Henry Labouchere, the C o l o n i a l Secretary at the time, responded: "Nevertheless i t has been doubted by a u t h o r i t i e s conversant i n the p r i n c i p l e s of Colo-n i a l Law, whether the Crown can l e g a l l y convey authority to make laws i n a settlement founded by Englishmen even for a temporary and s p e c i a l purpose to any l e g i s l a t u r e not elected wholly, or i n part, by the s e t t l e r s themselves. If t h i s be the case, the clause in your commission on which you r e l i e d would appear unwarranted and i n v a l i d " (cited i n L i o n e l H. Kaing, "The Family-Compact-Com-pany", The Washington H i s t o r i c a l Quarterly, Vol. XXII, no. 1 (January 1931), p. 120). 81 John Garner, The Franchise and P o l i t i c s i n B r i t i s h North  America, 1755-1867 (Toronto, University of Toronto Press, 1969), p. 119. 95 who possessed 20 acres of land or more, and each member had to possess a f r e e h o l d estate worth 300 pounds. Absentee p r o p r i e t o r s were a l s o allowed to vote through t h e i r r e s i d e n t agents. The f r a n c h i s e d i s q u a l i f i e d the m a j o r i t y of employees, miners and others, and had the r e s u l t of l e a v i n g State power i n the hands of the Company. As John Garner s a i d : These two f e a t u r e s , proxy v o t i n g and a high property q u a l i f i c a t i o n f o r members, were to enhance the p o l i t i c a l power of the Hudson's Bay Company. Few c i t i z e n s other than i t s o f f i c e r s possessed the amount of property r e -quired to q u a l i f y as a member and the proxy v o t i n g was of b e n e f i t to few but absentee o f -f i c e r s of the Company. Hence s i x members of the f i r s t Assembly were i n the s e r v i c e of the Hudson's Bay Company or the Puget Sound A g r i -c u l t u r a l Company, and the seventh member was the Company's nominee.^ The Company dominated more than j u s t the Assembly, however, i t a l s o c o n t r o l l e d the r e s t of the s t a t e apparatus. The C o u n c i l was composed of John Work, R. F i n l a y s o n , and Mr. Todd, a l l high-rank-ing Hudson's Bay Company o f f i c i a l s , and the Chief J u s t i c e s h i p went to David Cameron, a c o a l c l e r k under the Company and the br o t h e r - i n - l a w of the Governor. The B r i t i s h C o l o n i s t p r o t e s t e d these arrangements by saying: "Other c o l o n i e s have been hampered by Family Compacts, but we have that e v i l blended w i t h the i n t e r -e s t s and i n f l u e n c e s of a chartered monopoly". And: "Our boasted E n g l i s h system of government under the r u l e of Governor Douglas, h i s b r o t h e r - i n - l a w , sons-in-law, nephews-in-law, and c l i q u e , i s 83 r a p i d l y becoming unworthy of the n a t i o n " . In short , the Hudson's 8 2 I b i d -83 c i t e d i n Laing, "The Family-Company-Compact", op. c i t . , p. 122. 96 Bay Company monopolized not only the economy, but a l s o State power. James Douglas, as the Governor of the Colony, the Chief Factor of the Hudson's Bay Company, and the p r i n c i p a l agent of the Puget's Sound A g r i c u l t u r a l Company, e x e r c i s e d complete con-t r o l over the p o l i t i c a l and economic l i f e of the community. Doug-l a s ' s i n t e r e s t s were those the Company, and not of the I s l a n d as a whole. The c o l o n i a l r u l e of the Hudson's Bay Company represented a  f u s i o n of m e r c a n t i l i s m and 19th century i m p e r i a l i s m . The C o l o n i a l O f f i c e attempted to juxtapose and harmonize B r i t i s h f r e e trade d o c t r i n e s and B r i t i s h i m p e r i a l i n t e r e s t s by a p p l y i n g to Vancouver Is l a n d Edward Gibbon Wakefield's ideas on c o l o n i z a t i o n . ^ W a k e f i e l d , who, as K a r l Marx s a i d , "discovered i n the c o l o n i e s the t r u t h as 85 to the c o n d i t i o n s of c a p i t a l i s t production i n the mother country", wanted to "manufacture wage-workers i n the c o l o n i e s " . I t was t h i s concern the concern f o r c a p i t a l i s t development that prompted Wakefield to develop h i s theory of "systematic c o l o n i z a t i o n " . see, E. G. Wakefield, A View of the A r t of C o l o n i z a t i o n (Oxford, 1914 (1849); and, England and America (New York, 1934). Also see, Peter Burrough (ed.), The C o l o n i a l Reformers and Canada (Toronto, M c C l e l l a n d & Stewart, 1969); A. G. L. Shaw (ed.), Great  B r i t a i n and the C o l o n i e s , 1815-1865 (London, Methuen & Co., 1970); and, G. Teeple, "Land, Labour, and C a p i t a l i n Pre-Confederation Canada", i n G. Teeple (ed.), C a p i t a l i s m and the N a t i o n a l Question  i n Canada (Toronto, U n i v e r s i t y of Toronto P r e s s , 1972). Marx, C a p i t a l , V o l . I , chapter x x x i i i , p. 839. Wakefield argued that g i v i n g away or s e l l i n g c o l o n i a l land at low p r i c e s precluded the e f f i c i e n t combination of labour and c a p i t a l ; i t would u l t i m a t e l y r e t a r d the development of a d i v i s i o n of labour. C o l o n i a l lands, t h e r e f o r e , had to be s o l d at a "su f -f i c i e n t p r i c e " to prevent c o l o n i s t s from becoming land-owners too soon. In the 1830s and 1840s immigrants u s u a l l y became land pro-p r i e t o r s i n short order, and i t was because of t h i s r e j e c t i o n of wage employment that Wakefield f e l t f o r c e d , i n the i n t e r e s t s of c a p i t a l i s t development, to place severe r e s t r i c t i o n s on the owner-ship of land. As Wakefield s a i d : Where land i s very cheap and a l l men are f r e e , where every one who so pleases can e a s i l y ob-t a i n a piece of land f o r h i m s e l f , not only i s labour very dear, as respects the l a b o u r e r s ' share of the produce, but the d i f f i c u l t y i s to o b t a i n combined labour at any p r i c e . 0 0 Thus, h i r e d workers would have ceased to be labourers f o r h i r e ; they would have become independent landowners, i f not Wakefield, England and America, V o l . I , p. 247; a l s o c i t e d i n H. 0. Pappe, "Wakefield and Marx", i n A. G. L. Shaw (ed.), Great B r i t a i n and Her Colonies (London, Methuen & Com-pany, 1970), p. 200. 98 competitors w i t h t h e i r farmer masters i n the market f o r l a b o u r . ^ Systematic c o l o n i z a t i o n , then, the s e l l i n g of c o l o n i a l land at a " s u f f i c i e n t p r i c e " i n order to guarantee wage labour, would prevent the d i s p e r s i o n of n a t u r a l wealth and f u r t h e r "primary accumulation". E a r l Grey, the C o l o n i a l Secretary, endorsed Wakefield's concept of "systematic c o l o n i z a t i o n " because, i n an age of l a i s s e z - f a i r e and free trade, he wanted to excuse the i m p e r i a l government from any d i r e c t expense f o r a c o l o n i z a t i o n scheme. The revenue from the s a l e of land and the taxes upon re n t s i n the Colony would provide money f o r an "emigration fund". On the other hand, P e l l y , the Governor of the Hudson's Bay Company, ap-proved of Wakefield's ideas because the Company, a c t i n g as the I b i d . , V o l . I I , p. 5; a l s o c i t e d i n i b i d . Cf. Engles d e s c r i p t i o n of the development of c a p i t a l i s m i n the United States "There were two f a c t o r s which f o r a long time prevented the i n -e v i t a b l e consequences of the c a p i t a l i s t system i n America from being revealed i n t h e i r true l i g h t . These were the access to ownership of cheap land and the f l o o d of immigrants. They en-abled the great mass of indigenous Americans, f o r year on end, to ' r e t i r e ' from wage-labour at an e a r l y age and to become f a r -mers, d e a l e r s or even entrepreneurs, whereas the hard l o t of the wage-labourer w i t h h i s status of p r o l e t a r i a n f o r l i f e , f e l l mostly on the immigrant. But America has grown out of t h i s e a r l y phase, the l i m i t l e s s v i r g i n f o r e s t s have disappeared and the s t i l l more l i m i t l e s s p r a i r i e s are passing more and more r a p i d l y out of the hands of the na t i o n and the s t a t e s i n t o those of p r i v a t e own-ers. The great s a f e t y - v a l u e against the r i s e of a permanent pro-l e t a r i a n c l a s s e f f e c t i v e l y ceased to operate". Engels, appendix to the American e d i t i o n of the Conditions of the Labouring Class  i n England, c i t e d i n Jurgen Kuczyuski, The Rise of the Working  Class (New York, McGraw-Hill, 1967), p. 161. 99 c o l o n i z i n g agent, would be able to c o n t r o l settlement and emig-r a t i o n , and thus, p r o t e c t i t s i n t e r e s t s i n the f u r trade , and at 88 the same time, p r o f i t as the organizers of the Colony. E a r l Grey, however, must have " s u f f e r e d from a strange de-l u s i o n " , as J . S. G a l b r a i t h s a i d , when he concluded that the Company's experience w i t h settlements at Red Ri v e r and on the Columbia q u a l i f i e d i t f o r the r e s p o n s i b i l i t y of c o l o n i z i n g the 89 Colony of Vancouver I s l a n d . The Hudson's Bay Company perverted Wakefield's concept of c o l o n i z a t i o n i n order to serve i t s i n t e r -e s t s i n the f u r trade. Wakefield had assumed that the organizers of a colony, l i k e the c a p i t a l i s t s at home, would be encouraged to inv e s t i n manufacturing and c a p i t a l i s t a g r i c u l t u r e , and t h e r e f o r e , would have need f o r a pool of l a n d l e s s wage-labourers. He urged expenditures by c a p i t a l i s t s and not j u s t i n v e s t i t u r e s i n trade. Wakefield wanted to keep labour s u f f i c i e n t l y abundant to a t t r a c t The high p r i c e charged f o r c o l o n i a l lands and the con-c e n t r a t i o n of po p u l a t i o n a l s o meant that "...the organizers of the Colony would gain c o n s i d e r a b l y through the r i s e i n r e a l e s t a t e values and the s a l e of land. There i s a good de a l of u n f r i e n d l y t a l k about Wakefield as a land s p e c u l a t o r , and a part of Wakefield's correspondence, u n f o r t u n a t e l y , lends some c r e -dence to these charges (B. Semmel, "The P h i l o s o p h i c a l R a d i c a l s and C o l o n i a l i s m " , i n Shaw (ed.), Great B r i t a i n and Her Co l o n i e s , P. 79). G a l b r a i t h , The Hudson's Bay Company as an Imp e r i a l  F a c t o r , p. 307. 100 c a p i t a l : under the monopoly of the Hudson's Bay Company, however, c a p i t a l was not a t t r a c t e d to the Colony. Farmers i n the e a r l y 1850s could not pay labourers s u f f i c i e n t l y high wages to prevent t h e i r d e s e r t i o n to the United States. The Hudson's Bay Company was a m e r c a n t i l i s t t r a d i n g organ-i z a t i o n w i t h i n t e r e s t s opposed to f r e e settlement; i t s power and wealth accrued from the trade i n f u r s , and i t was that trade which b e n e f i t e d from the a p p l i c a t i o n of a perverted form of Wakefield's theory of system-a t i c c o l o n i z a t i o n . I t was not s u r p r i s i n g that there were only three i n -dependent purchasers of over 100 acres during the p e r i o d of Colonial-Com-pany-Rule . (F) The Fur Trade and C a p i t a l Accumulation  (i).The Northwest Company The economic', s t r u c t u r e of Canada during the Montreal f u r trade was that of commercial c a p i t a l i s m . The Canadian entrepreneurs were e s s e n t i a l -l y merchant-traders who accumulated c a p i t a l through the unequal exchange of goods or through s p e c u l a t i o n on produce and on land; they were mercan-90 t i l i s t s , f i r m l y t i e d to the s t r u c t u r e of the B r i t i s h c o l o n i a l system. The main economic a c t i v i t y around the t u r n of the eighteenth century i n B r i t i s h North America was the f u r trade. Edward E l l i c e , t e s t i f y i n g be-f o r e the Select Committee on the Hudson's Bay Company i n 1857, s a i d that i n 1803 "the whole of the Canadian s o c i e t y , every person of eminence and consequence there, was then engaged i n the f u r trade, i t being the only 91 trade of importance i n the Country". The c a p i t a l requirements of the A l f r e d Dubuc, "Problems i n the Study of S t r a t i f i c a t i o n of the Canadian Society from 1760 to 1840", i n M i c h i e l Horn & Ronald Sabourin ( e d t s . ) , Studies i n Canadian S o c i a l H i s t o r y (Toronto, McClelland & Stewart, 1974), p. 132. c i t e d i n G. Myers, A H i s t o r y of Canadian Wealth (Toronto: James Lewis & Samuel, 1972 (1914), p. 57. 101 f u r trade i n v o l v e d the p r o v i s i o n of short-term, merchant c a p i t a l ; the r a t i o of f i x e d to c i r c u l a t i n g c a p i t a l was very low. Merchant c a p i t a l , which was w e l l adapted to gathering up and exchanging surface products, dominated s t a p l e production. 92 The Northwest Company, "a d i s t i n c t i v e l y Canadian concern", began as a loose union or p a r t n e r s h i p of independent merchants and t r a d e r s . These merchant-traders, many of whom had made fortunes i n the "process of charg-93 ing e x o r b i t a n t p r i c e s on government c o n t r a c t s " , pooled t h e i r c a p i t a l t o -gether; at f i r s t , f o r l e s s than a year, but l a t e r f o r two years and then longer. The absence of share c a p i t a l and the p r a c t i c e of d i s t r i b u t i n g p r o f i t s annually meant that the Northwest Company could not accumulate l a r g e f i n a n c i a l reserves; i t was an o r g a n i z a t i o n de-signed f o r an expanding trade, not f o r a s t a b l e or d e c l i n i n g o n e . ^ While the Northwest Company d i d not accumulate l a r g e f i n a n c i a l r e -serves, the i n d i v i d u a l merchant-traders derived great fortunes from the p r o f i t s of the Northwest Company. Even before the f u r merchants had be-gun to channel t h e i r p r o f i t s i n t o other a c t i v i t i e s , however, they had be-95 come the foremost b e n e f i c i a r i e s of hugh land grants. I n i t i a l l y the 92 I b i d . , p. 54. 93 I b i d . , p. 55. 94 Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 166. 95 I n 1802 Simon McTavish r e c e i v e d a grant of 11,550 acres; W i l l i a m M c G i l l i v r a y a grant of 11,550 acres. In 1810 the E l l i c e f a m i l y obtained a grant of 25,592 acres and another grant of 3,819 acres. In 1815 John Richardson r e c e i v e d 29,800 acres and Thomas Dunn, 11,500 acres. The Frobisher e s t a t e comprised 57,000 acres and M c G i l l ' s possession comprised 38,000 acres; e t c . G. Myers, A H i s t o r y of Canadian Wealth, pp. 66-67. 102 merchant c l a s s had been opposed to the a r i s t o c r a t i c s t r u c t u r e of s o c i e t y and had sought the establishment of i n s t i t u t i o n s of parliamentary demo-cracy which they hoped to c o n t r o l . But a f t e r accumulating a c e r t a i n amount of wealth i n trade, they compromised and formed a power a l l i a n c e w i t h the a r i s t o c r a t i c element and many of the f u r t r a d e r s bought s e i g n -96 e r i e s . As the f u r trade began to d e c l i n e , the f u r merchants became h e a v i l y i n v o l v e d i n land s p e c u l a t i o n , and t h e i r p r o f i t s from the North-west Company became "conspicuous i n banks, steamboats, r a i l r o a d s , and 97 other c a p i t a l i s t channels". The Bank of Montreal, f o r example, was founded i n 1817 l a r g e l y by the f u r t r a d e r s of the Northwest Company i n conjunction w i t h other prominent merchants, such as John Molson. John Gray, the f i r s t P r esident of the Bank, was a r e t i r e d Northwest t r a d e r , and Samuel Gerrard, the P r e s i d e n t from 1820 to 1826, financed the XY Com-pany between 1797 and 1804, as w e l l as operating a l a r g e Montreal export/ import business. Samuel Gerrard was a l s o a member of the new f i r m , Ger-r a r d , G i l l e s p i e & Company, which had taken over the business of the Northwest Company from the former p a r t n e r s h i p . Peter M c G i l l , an o l d Northwester, was a l s o involved i n the founding of the Bank of Montreal. M c G i l l was President between 1834 and 1860, and at the same time, he had become inv o l v e d i n the o r g a n i z a t i o n of Canada's f i r s t r a i l w a y , i n the operation of the Lachine Canal, i n the development of one of the f i r s t steamboat companies i n Canada, and i n p o l i t i c s : he was appointed to the see, Dubuc, "Problems i n the Study of S t r a t i f i c a t i o n of Canadian S o c i e t y " , op_. c i t . , p. 113. Cf. Maurice Dobb, Studies i n the Develop- ment of C a p i t a l i s m , p. 120: "One f e a t u r e of t h i s new merchant bourgeoisie that i s at f i r s t as s u r p r i s i n g as i t i s u n i v e r s a l , i s the readiness w i t h which t h i s c l a s s compromised w i t h f e u d a l s o c i e t y once i t s p r i v i l e g e s had been won". Myers, A H i s t o r y of Canadian Wealth, p. 61-62. 103 l e g i s l a t i v e C o u n c i l of Canada i n 1841 and i n 1847 he became Speaker of 98 the C o u n c i l w i t h a seat i n the Executive C o u n c i l . ( i i ) The Hudson's Bay Company The Northwest Company had "brought fortunes out of the west to be spent i n c i t i e s of the east", a f t e r the Hudson's Bay Company absorbed the North West Company, however, the west "became a p r i v a t e preserve, ex-99 p l o i t e d f o r a handful of E n g l i s h shareholders". S i r John P e l l y , the Governor of the Hudson's Bay Company between 1822 and 1852, gave some i n -d i c a t i o n of the p r o f i t a b i l i t y of the f u r trade f o r h i s f e l l o w E n g l i s h stockholders when he t e s t i f i e d before the Select Committee i n 1857: ...as n e a r l y as I am able to judge from the de-f e c t i v e s t a t e of the books during the past century, p r o f i t s on the o r i g i n a l l y subscribed c a p i t a l stock, a c t u a l l y paid up, of between 60 and 70 per cent per annum from the years 1690 to 1 8 0 0 . 1 0 0 The c a p i t a l stock of the Hudson's Bay Company stood at 10,500 pounds i n 1676; i n 1720 i t was increased to 103,950 pounds, but only 13,150 had a c t u a l l y been paid i n . " ^ ^ " Throughout the years of the s t r u g g l e w i t h the Northwest Company, the Company paid a 4% di v i d e n d . In the f i r s t year a f -t e r amalgamation the Company had shown a l o s s , but during the next year i t r e a l i z e d a p r o f i t of 40,000 pounds, representing a 10% divide n d on a c a p i t a l stock that had been increased to 400,000 pounds. By 1854 the c a p i t a l stock had been increased to 500,000 pounds, and on t h i s c a p i t a l of 500,000 pounds, dividends and bonuses had reached a high of 25% i n 1838. 98 M e r r i l l Denison, Canada's F i r s t Bank, A H i s t o r y of the Bank of  Montreal, V o l . I (Toronto, McClelland & Stewart, 1966), p. 428. 99 Douglas Mackay, The Honourable Company: A H i s t o r y of the Hudson's  Bay Company (New York: Bobbs-Merril Co., 1936), p. 257. c i t e d i n G. Myers, A H i s t o r y of Canadian Wealth, p. 42-43. I b i d . , p. 41. 104 102 Between 1842 and 1862, dividends paid out averaged 10% The Hudson's Bay Company argued that i t earned the ordi n a r y r a t e of me r c a n t i l e p r o f i t . C r i t i c s of the Company, however, were not as kind and charged that the Company's r a t e of p r o f i t was excessive. I t was a l -leged, f o r example, that on an o u t l a y of 211,000 pounds and w i t h an an-nual revenue of about 750,000 pounds, the Company had made a net p r o f i t of 103 119,000 pounds a r a t e of p r o f i t w e l l over 50%. But whatever method of c a l c u l a t i o n used, i t was undeniable that the Hudson's Bay Company made enormous p r o f i t s . Edward E l l i c e t o l d the Se l e c t Committee that the aver-104 age annual p r o f i t between 1840 and 1857 amounted to 65,573 pounds. E l l i c e made c l e a r i n h i s testimony, however, that these p r o f i t s were de-r i v e d s o l e l y from the operation of the f u r trade and d i d not in c l u d e the other business a c t i v i t i e s of the Company, such as the p r o f i t s of the Puget's Sound A g r i c u l t u r a l Company or i t s t r a d i n g and r e t a i l o perations. The importance of these other a c t i v i t i e s was i n d i c a t e d by the f a c t that the Company's tax r e t u r n of p r o f i t s averaged 124,578 pounds between 1859 and 1862, whereas the p r o f i t from the f u r trade i t s e l f t o t a l l e d about 75,000 p o u n d s . 1 0 5 102 E. E. R i c h , The H i s t o r y of the Hudson's Bay Company 1670-1870, 3 V o l s . (London: Hudson's Bay Record S o c i e t y , 1958-1959), V o l . I l l , p.817; Mackay, The Honourable Company, Appendix D, E, pp. 339-49. 103 R i c h , Hudson's Bay Company, V o l . I l l , p. 817. 104 I b i d . , Myers, A H i s t o r y of Canadian Wealth, p. 133; I n n i s , The Fur Trade i n Canada, p. 337. Ri c h , Hudson's Bay Company, V o l . I l l , p. 817. 105 I t has been estimated that by 1857 the Hudson's Bay Company had ex-t r a c t e d 20 m i l l i o n pounds i n p r o f i t from the f u r trade i n B r i t i s h North America."^ 0 One-half of the c a p i t a l accumulated by the stockholders of the Company, according to one c a l c u l a t i o n , l a t e r came back to Canada i n the form of p o r t f o l i o investments."^ 7 The f u r trad e , along w i t h the entrepot trade i n other p a r t s of the world, was an important source of la r g e amounts of c a p i t a l which B r i t a i n used to fi n a n c e her i n d u s t r y and l a t e r her formal and i n f o r m a l empire. As G. Myers s a i d : Here was one of the prime o r i g i n s of the c a p i t a l " '. ,v f l o w i n g i n t o England, part of which went l a t e r i n t o f a c t o r i e s , mines and other c a p i t a l i s t con-cerns at home, and part i n t o investments i n Canada and elsewhere.^-0S The d i r e c t o r s , o f f i c i a l s and shareholders of the Hudson's Bay Company were members of the merchant c a p i t a l i s t c l a s s who, w i t h the support and backing of a segment of the a r i s t o c r a c y , channelled t h e i r c a p i t a l surp-luses i n t o banking, t r a n s p o r t a t i o n and commerce. Many of the d i r e c t o r s of the Hudson's Bay Company had other i n t e r e s t s besides the f u r trade. Governor Shepherd f o r example was deeply com-mitted to the East I n d i a trade, Simpson and P e l l y were engaged i n the B a l t i c timber tra d e , C o l v i l e ' s i n t e r e s t i n sugar remained w i t h him, 106 Myers, A H i s t o r y of Canadian Wealth, p. 46, 136. 1 0 7 I b i d . , p. 137. 108 I b i d . , p. 47; But as Myers says at another p o i n t : "While one branch of the E n g l i s h t r a d i n g c l a s s was b e n e f i t i n g from the e x p l o i t a -t i o n of Canada, other branches were pocketing p r o f i t s from that i n I n d i a and elsewhere, from the opium t r a f f i c i n China and from the hor-r o r s of the f a c t o r y system i n England i t s e l f " (p. 142, f n . 16). 106 and E l l i c e combined p o l i t i c a l and f i n a n c i a l i n t e r e s t s as a former Secretary of the Treasury and M.P. f o r Coventry might be expected to do.109 F i n a n c i a l c a p i t a l emerged from merchant c a p i t a l through the p o o l i n g together of the c a p i t a l accumulated by merchants i n trade and by the development of banking. B r i t i s h c a p i t a l i s t s exported between 1815 and 1875 a c a p i t a l surplus amounting to about h a l f a m i l l i o n pounds.1"'"0 Most of t h i s investment occurred a f t e r 1850. At the time of the Union of the Canadas, B r i t a i n ' s accumulated balance of c r e d i t abroad equalled about 162 m i l l i o n pounds, by 1850 i t t o t a l l e d 225 m i l l i o n pounds, and by Con-f e d e r a t i o n the amount had climbed to 576 m i l l i o n p o u n d s . 1 1 1 The amount of t h i s investment was small i n comparison to what was to occur between 1875 and the F i r s t World War; but i t was important because by 1875, as L. H. Jenks s a i d : The export of c a p i t a l was over. Her f u r t h e r i n -vestments were to come f o r a generation from the accruing p r o f i t s of those which had already been made. They were to c o n s i s t i n what a German w r i t e r 1 1 9 has termed 'the secondary export of c a p i t a l ' . The Hudson's Bay Company epitomized the a l l i a n c e that occurred be-tween a segment of the landed c l a s s and merchant c a p i t a l i s m p r i o r to the onset of the I n d u s t r i a l R e v o l u t i o n . The m e r c a n t i l e operations of the Com-pany c o n t r i b u t e d to the process of p r i m i t i v e accumulation of c a p i t a l i n 109 R i c h , Hudson's Bay Company, p. 819. 1 1 0 Jenks, The M i g r a t i o n of B r i t i s h C a p i t a l to 1875 (London, Thomas Nelson & Sons, 1927), p. 333. 1 1 1 A l b e r t H. Imlah, " B r i t i s h Balance of Payments and Export of C a p i t a l , 1816-1913", The Economic H i s t o r y Review, Second S e r i e s , V o l . V, no. 2 (1952), Table, pp. 234-39. 112 L. H. Jenks, The M i g r a t i o n of B r i t i s h C a p i t a l to 1875, p. 333. 107 B r i t a i n . But even a f t e r the emergence of i n d u s t r i a l c a p i t a l and the breakdown of the Old C o l o n i a l System, the merchant c a p i t a l i s t c l a s s , to which the o f f i c i a l s and d i r e c t o r s of the Hudson's Bay Company belonged, continued to dominate the p o l i t i c s of B r i t i s h i m p e r i a l i s m . The p e c u l i a r nature of the outward t h r u s t of B r i t i s h expansion, i t s outward o r i e n t a -t i o n , can be accounted f o r by the continued dependency of i n d u s t r i a l c a p i -113 t a l on merchant c a p i t a l . I t was the merchant c l a s s who put c a p i t a l to work i n the i n t e r e s t of b i n d i n g f o r e i g n markets to the B r i t i s h f a c t o r y and i n developing sources of f o o d s t u f f s and raw m a t e r i a l s . Canada r e -presented an important o u t l e t f o r B r i t a i n ' s c a p i t a l surpluses and she was an important source of raw m a t e r i a l s . The c a p i t a l invested i n Canada's t r a n s p o r t a t i o n system between 1850 and 1856, f o r example, represented 114 c l o s e to 30% of B r i t a i n ' s net income a v a i l a b l e f o r f o r e i g n investment. For Canada during the 1850s and 1860s, however, as f o r I n d i a , the importa-t i o n of B r i t i s h c a p i t a l i m p l i e d a p e r s i s t e n t measure of economic and p o l i -t i c a l c o n t r o l from London. I t was w i t h i n t h i s framework of expanding B r i t i s h c a p i t a l i s m that the c o n s o l i d a t i o n and expansion of B r i t i s h North America took p l a c e . 113 see, Fred Block, "Expanding C a p i t a l i s m : The B r i t i s h and American Cases", Berkeley J o u r n a l of Sociology, V o l . XV (1970), p. 139. 114 B r i t a i n ' s net income a v a i l a b l e f o r f o r e i g n investment f o r the years 1850 to 1856 i n c l u s i v e t o t a l l e d about 70 m i l l i o n pounds (Tmlah, " B r i t i s h Balance of Payments and Export of C a p i t a l " , £p_. c i t . , pp. 335-36) I t has been asserted that the 20 m i l l i o n pounds of r a i l w a y c a p i t a l during the 1850s had already been invested by 1856 (H. C. Pentland, "The Role of C a p i t a l i n Canadian Economic Development Before 1875", The Canadian  J o u r n a l of Economics and P o l i t i c a l Science, V o l . XVI, no. 4 (November, 1950), p. 464, f n . 24). 108 (G) Conclusion The Hudson's Bay Company was l a r g e l y r e s p o n s i b l e f o r extending and main t a i n i n g B r i t i s h a u t h o r i t y i n the P a c i f i c Northwest. The extension of B r i t i s h a u t h o r i t y across the North American c o n t i n e n t , however, occurred w i t h i n the framework of expanding c a p i t a l i s m . B r i t a i n was w i l l i n g to use whatever means necessary to check American expansion and to maintain i t s s t r a t e g i c i n t e r e s t s ; those means, however, changed, and the character of im p e r i a l i s m changed, as the economic s t r u c t u r e of B r i t a i n was transformed. I t was becoming abundantly c l e a r by the l a t e 1840s that the Hudson's Bay Company demonstrating the " i m p e r i a l i s m of monopoly" and f o l l o w i n g a str a t e g y of defensive expansionism was no longer a c t i n g as the most ap-p r o p r i a t e v e h i c l e of the i m p e r i a l i n t e r e s t . The Hudson's Bay Company was an anomoly i n the age of i n d u s t r i a l c a p i t a l i s m , and i t i n c r e a s i n g l y came under a t t a c k by the merchants and i n d u s t r i a l i s t s who were the bearers of the new s o c i a l r e l a t i o n s of production and of the new conception of empire. The mounting o p p o s i t i o n to the Hudson's Bay Company and the emergence of Anglo-Canadian expansionism were roughly c o - i n c i d e n t a l ; and, they can both be traced to changes i n the B r i t i s h m e t r o p o l i s . During the 1840s the d i s a f f e c t i o n among the i n h a b i t a n t s of the Red Ri v e r area, c r i t i c i s m by former servants, supported by m i s s i o n a r i e s , and accusations of en s l a v i n g the Indians posed an immediate and se r i o u s problem f o r the Hudson's Bay Company. The most se r i o u s t h r e a t to the continued existence of the f u r -t r a d i n g monopoly, however, d i d not come from the d i s s i d e n t c o l o n i s t s and s e t t l e r s on Vancouver I s l a n d , or from the m i s s i o n a r i e s and humanitarians who c r i t i c i z e d the Company f o r i t s treatment of the Indians, but from the 109 Canadian and B r i t i s h c a p i t a l i s t s who c l e a r l y saw that the i n t e r e s t s of monopoly could not be r e c o n c i l e d w i t h a g r i c u l t u r a l and commercial development. On February 5, 1857 the Secretary of State f o r the C o l o n i e s , Henry Labouchere, appointed a s e l e c t committee of Parliament "to consider the State of those B r i t i s h Possessions i n North America which are under the a d m i n i s t r a t i o n of the Hudson's Bay Company, or over which they possess a Licence of T r a d e " . 1 1 5 The Report of the S e l e c t Committee warned of the approaching end of the Company's monopoly. I t recognized the d e s i r e of Canada to extend i t s a g r i c u l t u r a l and commercial boundaries, and i n the i n t e r e s t s of Empire s o l i d a r i t y i t concluded that i t i s e s s e n t i a l to meet the j u s t and reason-able wishes of Canada to be enabled to annex to her t e r r i t o r y such p o r t i o n s of the land i n her neigh-bourhood as may be a v a i l a b l e to her f o r the purposes of settlement, w i t h which lands she i s w i l l i n g to open and maintain communications, and f o r which she w i l l provide the means of l o c a l administration.-'--'- 0 Furthermore, the Committee recommended the t e r m i n a t i o n of the Hudson's Bay Company's r u l e on Vancouver I s l a n d "as the best means of favouring the de-velopment of the great n a t u r a l advantages of that important c o l o n y " , 1 1 7 and a l s o the eventual establishment of a colony i n the Indian T e r r i t o r i e s west of the Rockies. In 1858, the C o l o n i a l O f f i c e , t a k i n g advantage of the " c o l o n i z i n g c l a u s e " i n the Licence of E x c l u s i v e Trade, e s t a b l i s h e d the Colony of B r i t i s h Columbia, and i n 1859, the Royal Grant of Vancouver 1 1 5 c i t e d i n G a l b r a i t h , The Hudson's Bay Company as an I m p e r i a l  Factor, p. 341. 116 c i t e d i n , R. G. T r o t t e r , Canadian Federation (Toronto, J . M. Dent & Sons, 1924), p. 242; and i n R i c h , Hudson's Bay Company, V o l . I l l , p. 799. I b i d . 110 Isl a n d to the Hudson's Bay Company was allowed to e x p i r e and i t became a Crown Colony. In general terms, however, the tone of the Committee's Report was f r i e n d l y . In a l l of the t e r r i t o r i e s where there were no pros-pects of settlement, the Hudson's Bay Company was permitted to continue to enjoy i t s p r i v i l e g e s of e x c l u s i v e trade. Nevertheless, the Committee's Report, as J . S. G a l b r a i t h s a i d , "heralded the end of the f u r - t r a d i n g mono-poly i n the ' f e r t i l e b e l t ' . From t h i s time, the Company was c o n t i n u a l l y harassed by the C o l o n i a l O f f i c e to make terms w i t h Canada, u n t i l i t was 118 forced to surrender". G a l b r a i t h , "The Hudson's Bay Company Under F i r e , 1847-r62", Canadian H i s t o r i c a l Review, V o l . XXX (1949), p. 329. . I l l V ANGLO-CANADIAN EXPANSIONISM  (A) I n t r o d u c t i o n Federation of the four eastern c o l o n i e s was only the nucleus of the t r a n s c o n t i n e n t a l commercial system envisaged by the commercial c l a s s of Montreal. I t was a p r o j e c t e d commercial system w i t h i n the context of B r i t i s h i m p e r i a l i s m , and E n g l i s h f i n a n c i a l c a p i t a l a c t i v e l y sought i t s achievement. The a c q u i s i t i o n of the West and expansion to the P a c i f i c were c e n t r a l purposes of Confederation. The West promised economic expan-s i o n , p o p u l a t i o n growth, and investment o p p o r t u n i t i e s , but most important, i t promised the development of a commercial system that would make B r i t i s h North America a great "half-way" house, c h a n n e l l i n g trade and commerce be-tween the Far East and Europe. Without a Dominion "from sea-to-sea" one of the main ob j e c t s behind Confederation would not be achieved. A l f r e d Waddington, a V i c t o r i a merchant, pointed t h i s out i n a speech to B r i t i s h Members of Parliament: B r i t i s h Columbia i s the key to the North P a c i f i c . Without her and Saskatchewan t e r r i t o r y , the very existence of Canada as a B r i t i s h dependency would be compromised, and before long at an end. The United States are already knocking at the door, and i f the whole of B r i t i s h North America i s not s p e e d i l y connected by an overland communication or by r a i l r o a d , England may b i d adieu f o r e v e r not only to Canada but to the greater p o r t i o n of her trade w i t h the East, and, as a consequence, to her com-m e r c i a l supremacy. The long d i s t a n c e and i m p e r i a l t r a d e , drawn across B r i t i s h North America, was the major reason behind the d r i v e to c o n s t r u c t a t r a n s c o n t i n e n t a l r a i l w a y . c i t e d i n Tim T r o u s d e l l , "From Sea to Sea Negotiations Between Ottawa and London", i n Shelton. (ed.), B r i t i s h Columbia and Confederation ( V i c t o r i a , U n i v e r s i t y of V i c t o r i a Press, 1967), p. 131. 112 A f t e r the f a i l u r e of the Grand Trunk Railway to capture the trade and commerce of the American mid-west, the Canadian r u l i n g c l a s s turned i t s a t t e n t i o n toward c o n t i n e n t a l c o n s o l i d a t i o n and expansion. T h e i r am-b i t i o n of m e r c a n t i l e expansion was based not only on the f a c t that Ameri-can r i v a l r y would not be a f a c t o r i n the Northwest, but a l s o on t h e i r i n -cr e a s i n g i n t e r e s t i n developing a t r a d i n g empire based on Asi a n commerce. The o l d dream of a passage to I n d i a was r e v i v e d : both V i c t o r i a and Mon-t r e a l would become o u t l e t s f o r P r a i r i e f o o d s t u f f s and s t a p l e s , and B r i t i s h North America would be the center of the world t r a f f i c p a t t e r n . With a t r a n s c o n t i n e n t a l highway l i n k i n g A s i a to Europe, Canada, as Edward Watkins s a i d : would w i e l d the "commercial sceptre of the world". And the Canadian banking, r a i l w a y and f i n a n c i a l i n t e r e s t s would p r o f i t through the extension of t h e i r intermediary a c t i v i t i e s across the con t i n e n t . The Canadian r u l i n g c l a s s was searching f o r i t s own h i n t e r l a n d s to e x p l o i t , but i t lacked the p o l i t i c a l framework f o r expansion. Confedera-t i o n would provide the necessary p o l i t i c a l s t a b i l i t y and economic s e c u r i t y f o r a p r o j e c t of economic growth. The new Canadian empire was not to be a s t r i c t l y " n a t i o n a l product" whose primary r a t i o n a l e was to be the pro-v i s i o n of markets f o r Canadian goods and o u t l e t s f o r Canadian c a p i t a l . On the c o n t r a r y , i t involved the development of a t r a n s c o n t i n e n t a l t r a d i n g system w i t h i n the framework of B r i t i s h i m p e r i a l i s m . Behind the d r i v e t o -ward Confederation stood B r i t i s h f i n a n c i a l c a p i t a l . The Canadian State was to act as the instrument of the f i n a n c i e r s of London, by guaranteeing t h e i r loans and investments, and at the same time i t was to serve t h e i r p a r t n e r s , the Canadian merchants, railwaymen and bankers. The Canadian r u l i n g c l a s s was u n i f i e d under the l e a d e r s h i p of the comprador b o u r g e o i s i e , 113 whose c l a s s i n t e r e s t s were f i r m l y l i n k e d to B r i t i s h i m p e r i a l i s t c a p i t a l . The entry of B r i t i s h Columbia i n t o the Canadian Federation has i t s ro o t s i n the same c o n f i g u r a t i o n of for c e s as those behind Anglo-Canadian expansionism; the two cannot be separated. A f t e r the amalgamation of the Northwest Company and the Hudson's Bay Company i n 1821, the economic  development of Canada and B r i t i s h Columbia was only separate i n a geo- graphic sense. Both regions remained connected by dent of t h e i r r e l a t i o n -ship to the B r i t i s h m e t r o p o l i s . The same c l a s s of B r i t i s h c a p i t a l i s t s who accumulated c a p i t a l surpluses from the f u r trad e , from the timber trade i n Canada, from I n d i a , and from other h i n t e r l a n d r e g i o n s , r e i n v e s t e d t h e i r c a p i t a l not only i n B r i t i s h i n d u s t r y , but a l s o i n i t s formal and i n f o r m a l empire, i n c l u d i n g Canada and c o l o n i a l B r i t i s h Columbia. The great merchant monopolies such as the Hudson's Bay Company and the East I n d i a Company, which were supported bu a segment of the B r i t i s h landed c l a s s , were i n -volved i n i n t e r n a t i o n a l merchant c a p i t a l i s m , and there was a d i r e c t con-t i n u i t y between these companies and the b i g merchant banks of the 19th century. The c a p i t a l i s t s connected w i t h these merchant banks and companies continued to dominate the p o l i t i c s of B r i t i s h i m p e r i a l i s m throughout the century. The c l a s s was engaged i n i n t e r n a t i o n a l f i n a n c e and trade and they put B r i t i s h c a p i t a l to work i n the i n t e r e s t of bi n d i n g f o r e i g n and c o l o n i a l markets to the B r i t i s h f a c t o r y and i n developing sources of food-s t u f f s and raw m a t e r i a l s . B r i t i s h Columbia was part of t h i s process of B r i t i s h economic i m p e r i a l i s m . 114 (B) The Rise and F a l l of the Second Commercial Empire of the St. Lawrence A f t e r the severance of the western f u r trade i n 1821, the merchant-t r a d e r s of Canada s h i f t e d t h e i r a t t e n t i o n to ca p t u r i n g the commerce of the Great Lakes Basin. They hoped to g r a f t the commerce of both sides of the Great Lakes, and even the Upper M i s s i s s i p p i V a l l e y , onto the St. Law-rence R i v e r , and thus, to b e n e f i t as the i n t e r m e d i a r i e s of the i m p e r i a l 2 trade. The Montreal merchants, i n t h e i r competition w i t h the Hudson R i v e r , had to f i n d new trades to develop, but the development of new s t a p l e s meant a new t r a n s p o r t a t i o n system and a new type of c a p i t a l : l o ng-term, f i x e d c a p i t a l . The i n d i v i d u a l f u r t r a d e r s and merchants of Montreal made great f o r -tunes from the f u r trade i n the Northwest, more than enough f o r the opera-t i o n of the trade i t s e l f . But w h i l e the merchant-traders accumulated c a p i t a l s u r p l u s e s , Canada as a whole began to experience, a f t e r 1815, the 3 se r i o u s problem of a c a p i t a l shortage. U n t i l 1815 the p r o v i s i o n of c a p i -t a l was not a problem. The d e c l i n e of the f u r trade was one reason con-t r i b u t i n g to t h i s problem; but, as Charles Pentland argued, the problem went much deeper: ...the b a s i c cause of the doldrums, the famine • • - ' : : of c a p i t a l , that plagued Canada a f t e r 1815 goes much deeper. The f a c t i s that a s t r u c t u r a l change was beginning, a change from a sea-coast economy of surface e x p l o i t a t i o n to an i n t e g r a t e d c o n t i n e n t a l economy; and the c a p i t a l requirements of the new economy were very d i f f e r e n t from the o l d . 4 see, Donald Creighton, The Empire of the St. Lawrence (Toronto, MacMillan, 1970 (1956), pp. 175-204; Easterbrook & A i t k i n , Canadian  Economic H i s t o r y , pp. 253-71. 3 H. C. Pentland, "The Role of C a p i t a l i n Canadian Economic Develop-ment Before 1875", The Canadian J o u r n a l of Economics and P o l i t i c a l Science, V o l . XVI, no. 4 (November, 1950), p. 459. I b i d . , p. 460. 115 What was needed i n order to develop the Canadian economy was long-term, f i x e d c a p i t a l , "the horror of the m e r c a n t i l e community". 5 The merchant-t r a d e r s , however, were h e s i t a n t to r i s k t h e i r c a p i t a l outside of trade and commerce. They channelled t h e i r c a p i t a l i n t o land s p e c u l a t i o n , not a g r i c u l t u r e , which would mean a long-term commitment, i n t o import/export operations, and n a t u r a l l y enough, i n t o t r a n s p o r t a t i o n . The partners of the Northwest Company, f o r i n s t a n c e , were prominent i n the promotion of the Lachine Canal, and l a t e r , i n the development of banking and r a i l w a y s . L o c a l c a p i t a l accumulation, however, was not enough to meet the r e q u i r e -ments: the stalemate of the 1830s was rescued by the imp o r t a t i o n of Eng-l i s h f i n a n c i a l c a p i t a l . C a p i t a l imports i n t o Canada equalled $25 m i l l i o n between 1827 and 1838; $35 m i l l i o n between 1841 and 1849; and $100 m i l -l i o n between 1850 and 1859. 7 Almost a l l of t h i s c a p i t a l flowed i n t o the f i n a n c i n g of the c o l o n i a l i n f r a s t r u c t u r e ; an i n f r a s t r u c t u r e that was de-signed to f a c i l i t a t e the movement of s t a p l e s w i t h i n the i m p e r i a l nexus. The c o n s t r u c t i o n of the e a r l y c a n a l s , l i k e the b u i l d i n g of the r a i l -ways i n the 1850s, was designed to a t t r a c t the a g r i c u l t u r a l exports of Upper Canada and the American mid-west to Montreal and the St. Lawrence route. Canada, encouraged by B r i t i s h preference on c o l o n i a l wheat, f l o u r , and timber, had committed her energy and resources to the c o n s t r u c t i o n of an expensive system of canals. The attempt to place the St. Lawrence at 5 I b i d . see, Myers, The H i s t o r y of Canadian Wealth, pp. 150-217. 7 Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 316; a l s o Pentland, op. c i t . , pp. 464-65. 116 the center of a great i m p e r i a l t r a d i n g system, however, e v e n t u a l l y f a i l e d . The commercial system of the St. Lawrence was based on the production and export of g r a i n and timber w i t h i n the context of B r i t i s h m e r c a n t i l i s m . The maturation of i n d u s t r i a l c a p i t a l i s m i n B r i t a i n and the r a p i d growth of i n d u s t r y i n the United S t a t e s , however, appeared to remove the very foundations upon which the St. Lawrence economy had been b u i l t . The con-8 s t r u c t i o n of r a i l w a y s i n the United States and the passing of the Draw-back Acts by the American Congress threatened to d i v e r t the trade of Western Canada and the American mid-west through American transport r o u t e s . The most severe blow to the commercial system of the St. Lawrence, how-ever, came w i t h the r e p e a l of the Corn Laws. The c o l l a p s e of the economy of the St. Lawrence, coupled w i t h a 9 worldwide c y c l i c depression i n the l a t e 1840s, was manifested p o l i t i -c a l l y i n the renewed a g i t a t i o n f o r amalgamation w i t h the United S t a t e s , p a r t i c u l a r l y by the merchants and f i n a n c i e r s of Montreal."^ The Annexation By 1850 over 9,000 m i l e s of r a i l r o a d t r a c k had been l a i d i n the U.S., whereas only 66 m i l e s had been l a i d i n Canada. Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 295. 9 G i l b e r t N. Tucker argues that the depression of the l a t e 1840s was world-wide i n scope and was not the r e s u l t of t a r i f f adjustments: "The Province..., from 1846 to 1850, was s u f f e r i n g from an o r d i n a r y c y c l i c de-p r e s s i o n . This was the b a s i c cause, and the p r i n c i p a l one, of the d i s -tempers of those troubled years. The change i n i m p e r i a l p o l i c y and the d i f f i c u l t i e s accompanying the readjustment of trade which r e s u l t e d , the f a i l u r e of the waterway, and the famine m i g r a t i o n of 1847...these things merely aggravated a malady which e x i s t e d independently of them, and which would have occurred had they been absent" (G. N. Tucker, The Canadian  Commercial R e v o l u t i o n , 1845-1851 (Toronto, McClelland and Stewart, 1964), p. 159). "Where your treasure i s , there w i l l your heart be a l s o " . For a d i s c u s s i o n on Annexation see, G. A. H a l l o w e l l , "The Reaction of the Up-per Canadian T o r i e s to the A d v e r s i t y of 1849: Annexation and the B r i t i s h American League", Ontario H i s t o r y , LXII (March, 1970); Arthur G. Penny, "The Annexation Movement, 1849-50", Canadian H i s t o r i c a l Review, V (September, 1924). 117 Manifesto of October, 1849, however, re c e i v e d l i t t l e support outside of the Montreal area, and the movement was s h o r t - l i v e d . P r o s p e r i t y began to r e t u r n i n the winter of 1849-50; trade w i t h the United States i n - , creased, and most important, B r i t i s h c a p i t a l became a v a i l a b l e f o r d e v e l -opment i n B r i t i s h North America. But wh i l e the annexation movement f a i l e d , the breakdown of the Old C o l o n i a l .System i r r e v o c a b l y changed Canada's economic o r i e n t a t i o n . The R e c i p r o c i t y Treaty of 1854 marked the beginning of an i n c r e a s i n g l y c o n t i n e n t a l o r i e n t a t i o n i n Canada's economic development. As Donald Masters argues, "...the d e s i r e f o r r e c i p r o c i t y was a p r o j e c t i o n of c o l o n i a l i s m . Having r e l i e d on a pr o j e c t e d B r i t i s h market and l o s t i t , the c o l o n i s t s now hoped to lean on the United States m a r k e t " . 1 1 (C) The 1850s: Railways and Industry A c o n t i n e n t a l o r i e n t a t i o n i n the development of trade, as symbol-i z e d by the R e c i p r o c i t y Treaty, was one element i n the process of read-justment to the changed economic c o n d i t i o n s i n B r i t a i n and the United States. The merchant c l a s s of Canada wanted to f u r t h e r develop the trade i n f o o d s t u f f s and n a t u r a l products w i t h the United S t a t e s , and R e c i p r o c i t y s a t i s f i e d the g r a i n and timber i n t e r e s t s of Upper Canada i n t h i s regard. The c y c l i c a l r e t u r n to p r o s p e r i t y which began i n the e a r l y 1850s, how-ever, reduced the sense of panic and R e c i p r o c i t y no longer appeared to be the only a l t e r n a t i v e to r u i n . Canadian c a p i t a l i s t s continued to promote and to i n v e s t i n the t r a n s p o r t a t i o n route of the St. Lawrence. I t was Donald Masters, " R e c i p r o c i t y , 1846-1911", The Canadian H i s t o r i c a l  A s s o c i a t i o n Booklet, Number 12 (1965), p. 3. Als o see, D. C. Masters, The R e c i p r o c i t y Treaty of 1854 (Toronto, McClelland & Stewart, C a r l e t o n L i b r a r y Number 9, 1963). 118 hoped that the c o n s t r u c t i o n of r a i l w a y s , complementing the waterways and canal system, would prove s u c c e s s f u l i n r e g a i n i n g some part of the trade i n g r a i n exports from the American mid-west. The strat e g y i n v o l v e d low-e r i n g the costs of the St. Lawrence route and i n converting the seaports 12 of the maritimes i n t o year-round o u t l e t s f o r the western trade. The Grand Trunk, chartered i n 1853 and backed by powerful E n g l i s h c a p i t a l i s t s , was the most important r a i l w a y p r o j e c t s t a r t e d i n the 1850s. I t was planed to strengthen the t r a d i n g system of the St. Lawrence, but l i k e the canal system, the attempt to capture the American mid-west trade event-u a l l y f a i l e d ; by 1860 the Grand Trunk was v i r t u a l l y bankrupt. The Grand Trunk, and the other r a i l w a y s i n i t i a t e d during the 1850s, f a i l e d i n t h e i r main purpose, but the b u i l d i n g of r a i l w a y s had profound e f f e c t s on the pace and d i r e c t i o n of Canadian economic and p o l i t i c a l de-velopment, and most important f o r our study, on the nature of Canadian expansionism. The r a i l w a y c o n s t r u c t i o n of the 1850s produced a great economic boom t y p i c a l of a pe r i o d of r a p i d c a p i t a l formation. The c a p i t a l imports to Canada financed the c o n s t r u c t i o n of f a c i l i t i e s i ndispensable to the production and export of s t a p l e products. C a p i t a l imports, how-ever, a l s o had the i n d i r e c t e f f e c t of s t i m u l a t i n g the growth of l o c a l 13 manufactures and a home market: i r o n f o u n d r i e s , locomotive shops, r o l -l i n g m i l l s and s m a l l - s c a l e consumer good e n t e r p r i s e s appeared during t h i s p e r i o d . But what must be remembered i s that the emergence of an i n f r a -s t r u c t u r e that could give r i s e to " e x t e r n a l economies" does not n e c e s s a r i l y Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 293. Stanley Ryerson w r i t e s : "Railways i n B r i t i s h North America served both as an instrument of c o l o n i a l i s m e x t r a c t i n g raw m a t e r i a l s and semi-119 r e s u l t i n increased investment and economic growth; f o r improvement of the c o n d i t i o n s f o r investment to occur, socio-economic development making f o r the p o s s i b i l i t y of a t r a n s i t i o n to i n d u s t r i a l c a p i t a l i s m must a l s o r e s u l t , otherwise the e x i s t i n g s o c i a l and economic s t r u c t u r e w i l l be maintained. As Paul Baran w r i t e s : For i t i s not r a i l w a y s , roads, and power s t a t i o n s that give r i s e to i n d u s t r i a l c a p i t a l i s m : i t i s the emergence of i n d u s t r i a l c a p i t a l i s m that leads to the b u i l d i n g of r a i l w a y s , to the c o n s t r u c t i o n of roads, and to the establishment of power s t a t i o n s . ^ 4 In B r i t a i n i n d u s t r i a l i z a t i o n preceded r a i l w a y s ; and i n the United S t a t e s , w h i l e not being an i n d u s t r i a l i z e d n a t i o n before 1840, r a i l w a y s nevertheless c o i n c i d e d w i t h nascent i n d u s t r i a l i z a t i o n the C i v i l War f i n a l l y removed the p o l i t i c a l and i n s t i t u t i o n a l f e t t e r s upon i n d u s t r i a l c a p i t a l i s m . Canada, on the other hand, was very much an a g r i c u l t u r a l and commercial economy i n the 1850s; i t was an economy based on commerce and s t a p l e production. Foreign c a p i t a l imports d i d not encourage i n d u s t r i a l growth, but b e n e f i t e d the merchants and f i n a n c i e r s who p r o f i t e d from the processed products r e q u i r e d by the metropolis and as engines of i n d u s t -r i a l i z a t i o n , s t i m u l a t i n g the growth of l o c a l manufactures and of a home market" (Ryerson, Unequal Union (Toronto: Progress Books, 1973), p. 258). Commenting on the r o l e of c a p i t a l i n Canadian economic development, H. C. Pentland argues that the development of the t r a n s p o r t a t i o n system i n general had important unintended e f f e c t s : "The canals and r a i l w a y systems, designed to i n t e n s i f y s t a p l e production artd i n t e r - c o n t i n e n t a l d i v i s i o n of labour, had p r e c i s e l y opposite e f f e c t s i n the end. They r e -presented, f i r s t , a commitment of f i x e d c a p i t a l , overhead c o s t s , and per-manent s t a f f s , that are the essence of m e t r o p o l i t a n economies. By i n t e -g r a t i n g the Canadian market, they opened the way f o r Canadian manufactures to conquer i t . Most important, the i n f l o w of f o r e i g n c a p i t a l i n t o Canada made i t p o s s i b l e at the second and t h i r d remove f o r Canadians to amass funds which could be invested i n new e n t e r p r i s e s " (Pentland, "The Role of C a p i t a l i n Canadian Economic Development", op_. c i t . , p. 463. Paul A. Baran, The P o l i t i c a l Economy of Growth (Middlesex, England, Penguin Books, 1973 (1957)), p. 336. 120 f i n a n c i n g , e x p l o i t a t i o n and movement of s t a p l e s . In Canada, c a p i t a l Im-ports financed " e x t e r n a l economies" to merchant c a p i t a l . There was no inducement or opportunity to i n v e s t i n n a t i v e i n d u s t r y ; manufactured goods were supplied from abroad. The market f o r manufactured goods i n Canada was not part of her i n t e r n a l market, but was an appendage of the i n t e r n a l market of B r i t a i n , and a f t e r 1850, and to an i n c r e a s i n g extent, of the United States. Domestic c a p i t a l accumulations were not channelled i n t o i n d u s t r i a l p u r s u i t s . This i s not to say that l o c a l i n d u s t r y was t o t a l l y absent; r a i l w a y c o n s t r u c t i o n stimulated i n d u s t r i a l growth, as Stanley Ryerson p o i n t s out, but i t was an i n d u s t r y dependent upon the maintenance of the e x i s t i n g s o c i a l and economic s t r u c t u r e . The manufac-tures that were e s t a b l i s h e d developed w i t h i n the l i m i t s determined by the mer c a n t i l e e l i t e , an e l i t e that p r e f e r r e d commerce to production. Manu-f a c t u r i n g entered those a c t i v i t i e s that were complementary to merchant c a p i t a l (e.g., r o l l i n g stock, ship b u i l d i n g ) , and the exp o r t - o r i e n t e d e l i t e had nothing to f e a r from such e n t e r p r i s e s . (D) The Canadian R u l i n g Class and Westward Expansion The r u l i n g c l a s s i n pre-confederation Canada was based on commerce and the State. An examination of the i n t e r - c o n n e c t i o n s between the p o l i t i c a l f i g u r e s of the day and r a i l w a y s , insurance companies, banks, land companies and other commercial a c t i v i t i e s s u b s t a n t i a t e s t h i s p o i n t . Nine of the d i r e c t o r s of the Grand Trunk, f o r example, were members of the government, and f i v e of these were Cabinet M i n i s t e r s . 1 5 As R. T. Naylor R. G. T r o t t e r , Canadian Federation (Toronto, J . M. Dent & Sons, 1924), p. 165; Ryerson, Unequal Union, p. 247. For a l i s t of some chap-t e r s issued by the Canadian Government to s i t t i n g l e g i s l a t o r s during the period of 1845 to 1848, and f o r a co m p i l a t i o n of the business a c t i v i t i e s 121 writes: The l i s t of eminent f i n a n c i e r s and railwaymen of the period i s a v e r i t a b l e "who's who" of Canadian p o l i t i c s f o r two generations-. And without excep-t i o n , the linkage runs from merchant cap i t a l i s m to finance, transportation, and land speculation,1° The most powerful group of Canadian c a p i t a l i s t s were located i n Montreal; they were centered within the Grand Trunk and the Bank of Montreal group. They thrived within the o r b i t of English, f i n a n c i a l c a p i t a l , and t h e i r i n t e r e s t s as railway promoters and contractors were interlocked with t h e i r i n t e r e s t s i n commercial a c t i v i t i e s such, as merchandising ? ship b u i l d i n g , import/export operations and banking. 1 7 Emerging indigenous i n d u s t r i a l c a p i t a l i s t s , "suck as the Gooderhams ( d i s t i l l e r s ) , the Mo1-sons (brewers), O g i l v i e ( f l o u r m i l l s ) j the Paxtons (Montral Steam Co-18 operage, 1857), Warden King i r o n founders (1852)L!, were also members of the "new r u l i n g c l a s s " ; but these i n d u s t r i a l c a p i t a l i s t s , concerned with preventing the emergence of competitors i n t h e i r markets-, looked with favour upon the absorption of c a p i t a l i n the sphere of c i r c u l a t i o n . of some prominent p o l i t i c a l f i g u r e s , see, Wallace Clement, The. Canadian  Corporate E l i t e j An Analysis of Economic Power (Toronto, McClelland & Stewart, Carleton Library No. 89, 1975), Appendix I, pp! 382-83. 16 Naylor, "The Rise and F a l l of the Third Commercial Empire of the St. Lawrence", i n G, Teeple (ed.), Capitalism arid the National Question i n Canada (Toronto, Un i v e r s i t y of Toronto Press, 1972), p, 17, 1 7 see, G. Tulchinsky, "The Montreal Business Community, 1837^-1853", i n D. S. Macmillan (ed.), Canadian Business History, :Selected Studies 1497-1971 (Toronto, McClelland & Stewart, 1972); also Clement, The Cana- dian Corporate E l i t e , pp. 57-58. Ryerson, Unequal Union, p. 276. 122 The c o n t r o l of the economy and the State r e s t e d s e c u r e l y w i t h the com-m e r c i a l group. The merchants of Montreal derived t h e i r p r o f i t s from commerce and s t a p l e production, and t h e i r i n t e r e s t s were i n the expansion and the p r o s p e r i t y of these a c t i v i t i e s . The merchants and t r a d e r s of Montreal, however, were not the ones who most s t r o n g l y voiced the i s s u e of westward expansion i n the 1850s; t h i s r o l e f e l l to the c a p i t a l i s t s centered i n Toronto. Toronto demanded the annexation of Rupert's Land because i t wanted to preserve the area as i t s own h i n t e r l a n d . George Brown, the e d i t o r of the Globe, and the spokesman f o r the a g r i c u l t u r a l and commercial i n t e r e s t s of Toronto w i t h i n the general c a p i t a l i s t i n t e r e s t s , had as e a r l y as 1850 denounced the 19 occupation of the Northwest t e r r i t o r i e s by the Hudson's Bay Company. Throughout the 1850s, Brown and the Globe took the lead i n a g i t a t i n g f o r the removal of the Company's monopoly i n Rupert's Land and f o r the opening of the t e r r i t o r y to Canadian settlement and commercial development. By 1857, the Upper Canadian Reform P a r t y , of which Brown was the l e a d e r , 20 adopted as one of i t s main planks the a c q u i s i t i o n of the Northwest. In a speech d e l i v e r e d i n the l a t e 1850s, Brown declared: S i r , i t i s my fervent a s p i r a t i o n and hope that some here tonight may l i v e to see the day when the B r i t i s h American f l a g s h a l l proudly wave from Labrador to Vancouver I s l a n d , and from our own 21 Niagara to the shores of Hudson Bay. 19 G a l b r a i t h , The Hudson's Bay Company as an I m p e r i a l F a c t o r , p. 334. 20 Frank H. U n d e r h i l l , "Some Aspects of Upper Canadian R a d i c a l Opin-i o n i n the Decade Before Confederation", The Canadian H i s t o r i c a l A s s o c i a - t i o n , Annual Reports, 1927, p. 52. 21 c i t e d i n T r o t t e r , Canadian Federation, p. 253. 123 Four years l a t e r , Brown wrote i n the Globe: The opening up of the country belongs not to Great B r i t a i n but to those who w i l l b e n e f i t by i t , to Canada... I t i s an empire we have i n view and i t s whole export and import trade w i l l be concentrated i n the hands of Canadian merchants and manu-o 9 f a c t u r e r s i f we s t r i k e f o r i t now. The Toronto Board of Trade, which had "a c e r t a i n o f f i c i a l r e c o g n i t i o n 23 as spokesman f o r Toronto business", was a l s o s t r o n g l y urging the develop-ment of the Hudson's Bay Company's lands. The board was dominated by 24 wholesalers and merchant t r a d e r s , and i t s primary o b j e c t i v e was to f u r -ther the c o n d i t i o n s f o r development. Above a l l , the board d e s i r e d f u r t h e r development, and i t supported a l l p r o j e c t s which i t thought would add to Toronto's h i n t e r l a n d and t i g h t e n i t s c o n t r o l over i t . The board's enthusiasm f o r opening the Northwest to settlement and com-merce was sta t e d i n a p e t i t i o n of 1857: With the advantage of the Canadian c o n s t i t u t i o n extended to i t s most d i s t a n t settlement, and the c i v i l i z i n g i n f l u e n c e commerce spreads over i t , who s h a l l l i m i t the f u t u r e greatness of t h i s noble country, w i t h i t s Eastern boundary r e s t i n g on the Gulf of St. Lawrence or the A t l a n t i c Ocean, and ex-tending West to the P a c i f i c . . . ^ 6 22 c i t e d i n U n d e r h i l l , "Some Aspects of Upper Canadian R a d i c a l Opinion", £p_. c i t . , p. 53. 23 Douglas McCalla, "The Commercial P o l i t i c s of the Toronto Board of Trade, 1850-1860", The Canadian H i s t o r i c a l Review, V o l . L (March, 1969), p. 52. 24 "The board was very much an o r g a n i z a t i o n of t r a d e r s . Trade, of course, was the primary way to fortune i n Toronto; r e l a t i v e l y few other avenues to wealth and business and s o c i a l l e a d e r s h i p e x i s t e d " (McCalla, "The Commercial P o l i t i c s of the Toronto Board of Trade", op_. c i t . , p. 53). 25 I b i d . , p. 55. 26 I b i d . , p. 57. 124 And i n 1859 the board declared: Canada must become at no d i s t a n t day, the great highway of i n t e r - o c e a n i c t r a f f i c and t r a v e l be-tween the eastern and western hemispheres.... A magnificent f u t u r e i s i n s t o r e f o r a country that has the means of connecting the trade of ^ the eastern world w i t h that of c i v i l i z e d Europe. The merchant c a p i t a l i s t of Toronto wanted to dominate the trade of the Northwest and to develop t h e i r own commercial t r a d i n g empire, but they lacked both c a p i t a l and p o l i t i c a l i n f l u e n c e . Toronto's c a p i t a l i s t a t -tacked v i g o r o u s l y what they considered the undue i n f l u e n c e of Montreal and the Grand Trunk. The Toronto Board of Trade, f o r example, attacked the Grand Trunk f o r d i s c r i m i n a t i n g against the commercial i n t e r e s t s of the r e g i o n ; the board was not opposed to r a i l w a y development, but as McCalla s a i d : "The board wanted the Grand Trunk, but only to extend Tor-28 onto's Canadian h i n t e r l a n d . . . " . Toronto's o p p o s i t i o n to the Grand Trunk was a symptom of t h e i r subordinate p o s i t i o n w i t h i n the Canadian economy and p o l i t i c s . The e f f o r t s of Gait and the Bank of Montreal to 29 monopolize c r e d i t f a c i l i t i e s and the e f f o r t s of the merchants of Mon-t r e a l to compel Upper Canada to d e a l e x c l u s i v e l y w i t h them went hand i n 30 hand w i t h t h e i r f i g h t against the Grand Trunk. Brown spoke an element of t r u t h when he wrote: "The Grand Trunk Railway governs Canada at the 2 7 ru-A I b i d . ^ I b i d . , p. 56. 29 The board advocated " f r e e trade i n money", d i s p l a y i n g t h e i r de-s i r e to a t t r a c t c a p i t a l , and opposed the r e p e a l of the 1850 Free Banking Act. See, i b i d . , p. 60. 30 U n d e r h i l l , "Some Aspects of Upper Canadian R a d i c a l Opinion", op. c i t . , p. 51. present moment. I t s power i s paramount 125 „ 31 The c a p i t a l i s t s of Montreal, as we have already mentioned, were absorbed i n attempting to recapture some part of the export trade of the American mid-west. Their energy and a t t e n t i o n was focused i n that d i r e c -t i o n , and throughout the 1850s, a g i t a t i o n f o r opening the Northwest to c a p i t a l i s t development remained the " s p e c i a l province" of George Brown and the commercial i n t e r e s t s of Toronto. The Canadian Government mani-f e s t e d r e l a t i v e l y l i t t l e i n t e r e s t i n the question of Rupert's Land, and i n the e a r l y stages, the pressure against the Hudson's Bay Company eman-ated almost e x c l u s i v e l y from Great B r i t a i n . In 1857, the Canadian gov-ernment d i d send delegates to argue Canada's p o s i t i o n before the Se l e c t Committee on the Hudson's Bay Company, but the motive f o r doing so ap-peared to r e s t on p o l i t i c a l expediency, r a t h e r than on genuine i n t e r e s t . As G a l b r a i t h w r i t e s : The MacDonald-Cartier government considered i t expedient to support the campaign r a t h e r than a l l o w Brown and the o p p o s i t i o n to c l a i m the c r e d i t f o r being the e x c l u s i v e spokesmen of the agarian West, but i t had l i t t l e genuine i n t e r e s t i n the annexa-t i o n of a l l or part of Rupert's Land.^2 The Canadian r e p r e s e n t a t i v e s who d i d appear before the s e l e c t com-mittee were c h i e f l y men i n t e r e s t e d i n t r a n s p o r t a t i o n . John Ross, f o r example, was a member of the Canadian Parliament and the President of the 33 Grand Trunk. Ross brought the idea of a t r a n s c o n t i n e n t a l r a i l w a y l i n e , 31 c i t e d i n i b i d . , p. 50. 32 G a l b r a i t h , The Hudson's Bay Company as an Im p e r i a l Factor, p. 343. 33 Ross was a member of the executive, speaker of the l e g i s l a t u r e and S o l i c i t o r General, and he was inv o l v e d i n the New Brunswick & Nova1-S c o t i a R a i l r o a d , the Niagara D i s t r i c t Bank, the Grand Trunk Railway, and the Bank of Canada (Clement, The Canadian Corporate E l i t e , p. 382). 126 wholly w i t h i n B r i t i s h t e r r i t o r y , to the f o r e f r o n t of d i s c u s s i o n . He ad-vocated an extension of the Grand Trunk system to the P a c i f i c ; he e n v i -saged a great commercial t r a d i n g empire that would l i n k England to the P a c i f i c and draw the trade and commerce of China and the Far East over an a l l B r i t i s h route to Europe. We d e s i r e to have i t c a r r i e d across the c o n t i n e n t , b e l i e v i n g that i t w i l l be f o r the i n t e r e s t s both of the I m p e r i a l and of the Canadian Government; and we t h i n k that the trade w i t h China and I n d i a ^ might be drawn over that l i n e of communication. Bur Ross had added that the question of a t r a n s c o n t i n e n t a l r a i l w a y was 35 "more an i m p e r i a l question than a c o l o n i a l one". In general, however, the 36 Canadian Government's moderate r e p r e s e n t a t i o n at the hearings of the Select Committee had i n d i c a t e d that i t was not prepared to take over the a d m i n i s t r a t i o n of the West, and indeed, i t had d i s p l a y e d l i t t l e i n t e r e s t i n s e r i o u s l y pursuing the question. As G a l b r a i t h s a i d : "By the end of 1857 the p o s i t i o n of the Hudson's Bay Company appeared to be stronger than i t had been before the s e l e c t committee of the House of Commons began i t s pro-37 ceedings". The a t t i t u d e of the Canadian Government, and of the merchants  and f i n a n c i e r s of Montreal, toward the economic p o s s i b i l i t i e s of the West,  however, changed d r a m a t i c a l l y i n the l a t e 1850s and e a r l y 1860s. c i t e d i n T r o t t e r , Canadian Federation, p. 240. 35 c i t e d i n R i c h , The,Hudson's Bay Company, I I , p. 822. 36 "The Globe i t s e l f saw the cautious government stand more and more as a b e t r a y a l of Canadian i n t e r e s t s to the Hudson's Bay Company and S i r George Simpson, and as f u r t h e r evidence of the domination of the Tache-MacDonald m i n i s t r y by the French..." (Morton, The C r i t i c a l Years, p. 35). G a l b r a i t h , The Hudson's Bay Company as an I m p e r i a l F a c t o r , p. 345. 127 The " h e c t i c " p r o s p e r i t y of the e a r l y 1850s, based on the massive i n -f u s i o n of B r i t i s h c a p i t a l , R e c i p r o c i t y and Crimean War came to an end i n 1857. P r i c e s began to f a l l i n B r i t a i n i n 1856, and i n August of the next year, the Ohio L i f e Insurance and Trust Company i n the United States c o l -lapsed, marking the beginning of a world-wide economic depression. The f i n a n c i a l c r i s i s not only brought to Canada unemployment, bankruptcies, and a c o l l a p s e of the land s p e c u l a t i o n boom, but i t a l s o s i g n a l l e d the end of any important i n f l u x of B r i t i s h c a p i t a l f o r 20 years. Only 490 of the 2,093 m i l e s of r a i l w a y t r a c k l a i d i n the 1850s were put down i n 1857, and 38 between 1860 and Confederation, only 213 m i l e s were added to the t o t a l . But most s i g n i f i c a n t of a l l , i t became abundantly c l e a r that the t r a n s p o r t -a t i o n system of the St. Lawrence had f a i l e d to capture the export trade of the American mid-west. Between 1855 and 1860, an average of 27,500,000 bushels of Canadian g r a i n were exported to the United States, but i t was shipped v i a B u f f a l o and Oswego, whereas only 672,625 bushels were shipped 39 by way of Canadian p o r t s . Montreal was bypassed, and both the Grand Trunk Railway, and the Canadian Government, were i n s e r i o u s f i n a n c i a l t r o u b l e . The Canadian Government was burdened by the f i n a n c i a l o b l i g a t i o n s i t had i n c u r r e d to the r a i l w a y companies and t h e i r i n v e s t o r s , and throughout M e r r i l l Denison, Canada's F i r s t Bank, A H i s t o r y of The Bank of  Montreal (Toronto - Montreal : McClelland & Stewart, 1966), V o l . I I , p. 81; Easterbrook and A i t k i n , Canadian Economic H i s t o r y , p. 316. Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 318; Masters, The R e c i p r o c i t y Treaty, Table N. X I , p. 150, a l s o see pp. 120-125. 128 the 1860s, A. T. Gait and the Government's agents i n London struggled to maintain p r o v i n c i a l solvency and a good c r e d i t standing. The e n t i r e p u b l i c debt of the province had climbed to more than $58 m i l l i o n i n 1860, and over the next seven years the n a t i o n a l debt n e a r l y doubled; i n 1867 40 i t amounted to $93 m i l l i o n . Government a s s i s t a n c e to the r a i l w a y s ac-counted f o r the greatest p o r t i o n of t h i s debt. The t o t a l f i n a n c i a l a i d extended to the r a i l w a y s under the Guarantee Act and Grand Trunk L e g i s l a -t i o n equalled about $33 m i l l i o n ; and another three m i l l i o n pounds was ad-41 ded through the v e h i c l e of the M u n i c i p a l Loan Fund Act. The Grand Trunk was the c h i e f b e n e f i c i a r y of government a i d : by 1867 the t o t a l indebted-ness of the Grand Trunk to the Government of Canada amounted to about $26 42 m i l l i o n . This amount was never r e p a i d , and i n e f f e c t i t represented, l i k e the a i d extended to other r a i l w a y companies, an o u t r i g h t subsidy. During the c r i s i s of the l a t e 1850s, the revenues of the Province were so reduced that i t was forced f o r the f i r s t time, d e s p i t e the s p i r i t e d op-p o s i t i o n of B r i t i s h and American manufacturers, to place a t a r i f f on manu-fac t u r e d goods e n t e r i n g Canada i n 1858. The Grand Trunk, from i t s very i n c e p t i o n , r e c e i v e d extensive f i n a n -c i a l a i d from the Government of Canada. In 1852 Hincks had gone to Lon-don i n the hope of o b t a i n i n g a guarantee from the C o l o n i a l O f f i c e f o r the Grand Trunk Railway, but i n s t e a d of g e t t i n g a B r i t i s h guarantee f o r Canad-i a n promoters, a Canadian guarantee was e v e n t u a l l y given to B r i t i s h c a p i t -a l i s t s . The Grand Trunk ran i n t o t r o u b l e soon a f t e r c o n s t r u c t i o n began: 40 Denison, The Bank of Montreal, V o l . I I , p. 129, 171. 41 Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 314, 316. 4 2 I b i d . , p. 309. 129 land s p e c u l a t i o n , i n f l a t e d wages, poor c o n s t r u c t i o n , heavy expenses, and inadequate t r a f f i c r e t u r n s made the r a i l w a y l e s s than a p r o f i t a b l e vent-ure. In 1855 the Grand Trunk was unable to pay i n t e r e s t on i t s bonds, and the Canadian Government came to the rescue w i t h a loan of 900,000 pounds; and i n the next year, an Act was passed gr a n t i n g a d d i t i o n a l a i d to the r a i l w a y . The finances of the Grand Trunk and the Government of Canada remained f i r m l y i n t e r t w i n e d from t h i s point onwards. Baring Brothers and Glyns, M i l l s and Company were the major f i n a n -43 c i e r s of the Grand Trunk, and of the Province of Canada, and a l l of the B r i t i s h c a p i t a l r a i s e d f o r Canada during the three decades f o l l o w i n g Dur-ham Report was r a i s e d by these two powerful merchant banks. Barings and Glyns were continuously advancing funds to t i d e over the Grand Trunk and to s u s t a i n the c r e d i t of the Province. Temporary loans p u l l e d the Grand Trunk through the panic of 1857 without bankruptcy: "But the problem was, i n the face of mounting misfortune across the A t l a n t i c , to maintain con-fidence i n Canada on the London stock markets so as to r a i s e money at a 44 p r i c e which was not e x o r b i t a n t " . In November, 1857 Glyns wrote Gait that i t was "out of the question attempting to move any of the Grand Trunk 45 S e c u r i t i e s i n t h i s market". And i n a l e t t e r to John Ross, S o l i c i t o r -General of Canada and President of the Grand Trunk, Glyns went so f a r as Barings and Glyns were the j o i n t f i n a n c i a l agents f o r Canada be-tween 1837 and 1892, see, Glyns, M i l l s & Company, "The Canadian F i n a n c i a l Agency", The Three Banks Review (March 1966, no. 49), pp. 29-40. 44 Roger F u l f o r d , Glyns' 1753-1953; S i x Generations i n Lombard Street (London, MacMillan & Co., 1953), p. 149. Cf. Denison, Bank of Montreal, V o l . I I , p. 81: "But so un s o p h i s t i c a t e d were the f i s c a l arrangements of the government that the co n c e n t r a t i o n of debt, unfavourable trade balances, and the s o r r y earnings performance of both the r a i l w a y s and the canals made Canadian r a i l w a y debentures unsalable i n London, while the frequent i s s u e of p r o v i n c i a l s e c u r i t i e s had already made Baring Brothers s t r o n g l y doubt that they would be able to maintain t h e i r p r i c e much longer". c i t e d i n i b i d . , p. 154. 130 to suggest that the Government of Canada take over the whole of the r a i l -46 way by paying o f f the stockholders by debentures. But d e s p i t e s p e c i a l loans from the province and the E n g l i s h Board of D i r e c t o r s , i n c l u d i n g personal loans by Thomas Baring and George Glyns, the finances of the Grand Trunk, and of the province of Canada, grew s t e a d i l y worse. The finances of the r a i l w a y company were " i r r e t r i e v a b l y compromised": by 1860, the Grand Trunk had a f l o a t i n g debt of $12 m i l l i o n , and i t s t o t a l indebtedness, i n c l u d i n g p r o v i n c i a l debentures, t o t a l l e d almost $60 47 m i l l i o n . Baring's and Glyns' continued to r a i s e c a p i t a l f o r the com-p l e t i o n of the Grand Trunk. In 1860, they bought out a 2,800,000 pound loan "...which was used to b r i n g a measure of order i n t o the then t h o r -48 oughly confused finances of the province". But by the end of the year, the loans by the two merchant banks were so l a r g e that s p e c i a l l e g a l ac-t i o n to claim.the p r i o r i t y to the r o l l i n g stock was taken. Loans from 49 Baring's alone equalled $1,867,650 by the end of 1860, and Glyns' l i a -b i l i t y , by the end of 1862, t o t a l l e d 736,000 pounds. 5 0 I t was no wonder that the Grand Trunk Railway "was to Glyns and Barings only 'Grand' i n the s c a l e of the worries i t brought and the money i t locked up over a long p e r i o d of time".5''' 46 see, Glyns, M i l l s & Company, "Glyns and the Grand Trunk Railway , Three Banks Review, (December 1961, no. 52), p. 32. 47 Easterbrook & A i t k i n , Canadian Economic H i s t o r y , p. 309. 48 Ralph W. Hidy, The House of Baring i n American Trade and Finance (Cambridge, Mass., 1949), p. 473. 49 I b i d . , p. 473. 5 0 F u l f o r d , Glyns', p. 155. 5 1 Glyns, M i l l s & Company, "Glyns and the Grand Trunk Railway", op. c i t . , p. 28. 131 (E) B r i t i s h F i n a n c i a l C a p i t a l and Confederation I t was w i t h i n t h i s context that the commercial i n t e r e s t s of Montreal, who had derived l i t t l e advantage from the R e c i p r o c i t y Treaty, and B r i t i s h f i n a n c i e r s , who were concerned w i t h the s e c u r i t y of t h e i r investment i n the r a i l w a y s , began to urge Confederation and westward expansion as a s o l u -t i o n to t h e i r f i n a n c i a l t r o u b l e s . In 1858, C a r t i e r , G a i t , and Ross t r a v e l -l e d to London i n an attempt to generate Imperial a i d and support f o r the completion of the I n t e r c o l o n i a l Railway, f o r the annexation of the Hudson's Bay Company's t e r r i t o r i e s and the opening of communications to the P a c i f i c , 53 and f o r a conference to n e g o t i a t e f e d e r a t i o n . The Canadian m i s s i o n , how-ever, f a i l e d to achieve a guarantee f o r the r a i l w a y , the question of Rupert's Land remained u n s e t t l e d and the C o l o n i a l O f f i c e d i s p l a y e d a marked The Canadian L e g i s l a t u r e e a r l i e r i n the year passed the f o l l o w i n g r e s o l u t i o n : "In view of the speedy opening up of the t e r r i t o r i e s now occupied by the Hudson's Bay Company, and of the development and s e t t l e -ment of the vast regions between Canada and the P a c i f i c Ocean, i t i s e s s e n t i a l to the i n t e r e s t s of the Empire at l a r g e , that a highway extend-ing from the A t l a n t i c Ocean westward should e x i s t , which should at once place the whole of B r i t i s h possessions i n America, w i t h i n ready access and easy p r o t e c t i o n of Great B r i t a i n , w h i l s t , by the f a c i l i t i e s f o r i n t e r n a l communication thus a f f o r d e d , the p r o s p e r i t y of those great dependencies would be promoted, t h e i r s t r e n g t h c o n s o l i d a t e d and added to the str e n g t h of the Empire, and t h e i r permanent union w i t h the Mother Country secured" ( c i t e d i n T r o t t e r , Canadian Federation, p. 259). 53 The Globe described the C a r t i e r - G a i t - R o s s m ission of 1858 i n the f o l l o w i n g terms: "They are n o t o r i o u s l y connected w i t h the Grand Trunk Railway and more e s p e c i a l l y w i t h i t s c o n t r a c t o r s who w i l l be c h i e f l y bene-f i t e d by the extension of that work to the Lower Provinces; and he must be b l i n d (Lytton) indeed i f he cannot see that the sudden love of confed-e r a t i o n i s f a r more the r e s u l t of the n e c e s s i t i e s of the r a i l w a y than of a d e s i r e to promote the welfare of B r i t i s h America" ( c i t e d i n U n d e r h i l l , "Some aspects of Upper Canadian R a d i c a l Opinion", op. c i t . , p. 56). 132 i n d i f f e r e n c e to the proposal f o r a f e d e r a l union. The a t t i t u d e of the I m p e r i a l government changed, however, i n the e a r l y 1860s; by 1862 the C o l o n i a l O f f i c e supported f e d e r a t i o n . C o n s t i t u t i o n a l deadlock, the sup-posed n e c e s s i t y of defense against American aggression (The Trent A f f a i r occurred i n 1861, and i n the f o l l o w i n g year the American C i v i l War s t a r t e d ) , and the change of government i n B r i t a i n (Newcastle became C o l o n i a l Secre-t a r y ) are reasons that are o f t e n put f o r t h to e x p l a i n t h i s s h i f t i n a t t i -tude. But a more fundamental reason f o r the change can be found i n the pressure exerted i n B r i t a i n by E n g l i s h f i n a n c i a l c a p i t a l . R. G. T r o t t e r w r i t e s : . . . f e d e r a t i o n found strong support from men i n B r i t a i n , of extensive i n t e r e s t s and powerful i n -f l u e n c e , who welcomed i t because they b e l i e v e d that i t promised f o r B r i t i s h North America the p o l i t i c a l s t a b i l i t y and economic s e c u r i t y without which e x i s t i n g e n t e r p r i s e s must remain i n jeopardy, and f u t u r e developments be l i m i t e d and uncertain.54 The economic advantages of confederation were many. The e s t a b l i s h -ment of a strong s t a t e s t r u c t u r e w i t h c e n t r a l i z e d c o n t r o l over a l l f i s c a l and f i n a n c i a l matters, currency and banking, and trade and commerce gener-a l l y would g r e a t l y strengthen Canadian c r e d i t 5 5 and f a c i l i t a t e the ac-q u i s i t i o n of Rupert's Land and westward expansion. The c o n s o l i d a t i o n of 54 R. G. T r o t t e r , " B r i t i s h Finance and Confederation", The Canadian  H i s t o r i c a l A s s o c i a t i o n , Annual Report, 1927, p. 93. 5 5 Canada's c r e d i t standing was at a very low ebb i n the 1860s. The p r o v i n c i a l debt continued to grow, and the province faced one of i t s numerous f i n a n c i a l emergencies i n the summer of 1864. The Bank of Mon-t r e a l became the only source to which the government could t u r n f o r s t e r l -i ng exchange required to maintain c r e d i t i n London. One month a f t e r the Quebec Conference, G a i t , who was c o n t i n u a l l y t r y i n g to maintain p r o v i n c i a l solvency, was forced to take out an a d d i t i o n a l "temporary" loan from the Bank of Montreal; by the end of 1864, the t o t a l government indebtedness to the Bank was $2,500,000. See, Denison, The Bank of Montreal, V o l . I I , pp. 130-36. 133 the economies of the B r i t i s h North American c o l o n i e s would open up a l a r -ger market, but more important, a b i g union would have s u f f i c i e n t c r e d i t to undertake the c o n s t r u c t i o n of r a i l w a y s to the two sea-coasts. I t was through such a program of r a i l w a y expansion that B r i t i s h c a p i t a l sought to save i t s investments. In 1861, Edward Watkins was appointed "Superintending Commissioner w i t h f u l l powers" of the Grand Trunk, and w i t h the b l e s s i n g of Baring's and Glyns', was sent to Canada to untangle the r a i l w a y ' s f i n a n c i a l t r o u b l e s . Watkin's s o l u t i o n was simple: extend the r a i l w a y to the P a c i f i c . In 1860, he wrote: The Grand Trunk, both as regards i t s l e n g t h , the character of i t s works and i t s a l l i a n c e s w i t h t h i r d p a r t i e s , i s both too expensive and too expansive f o r the Canada of today and, l e f t as i t i s , dependent mainly upon the development of p o p u l a t i o n and i n d u s t r y on i t s own l i n e and upon the increase of the t r a f f i c from the west, i t cannot be expected f o r years to come, to emancipate i t s e l f thoroughly from the load of o b l i -gations connected w i t h i t . The way (to make a great success i n a short t i m e ) . . . t o my mind l i e s through the extension of r a i l w a y communi-c a t i o n to the P a c i f i c . Try f o r one moment to r e a l i z e China opened to B r i t i s h commerce, Japan a l s o opened, the new gold f i e l d s i n our t e r r i t o r y to the extreme west and C a l i f o r n i a a l s o w i t h i n reach, I n d i a , our Aust-r a l i a n c o l o n i e s . Try to r e a l i z e . . . a main through r a i l w a y from the shores of the A t l a n t i c to the P a c i f i c . . . T h e r e s u l t to t h i s Em-p i r e would be something to d i s t i n g u i s h the age i t s e l f (and he adds almost i n c i d e n t a l l y ) ; and the doing of i t would make the fortune of the Grand Trunk... The e n t e r p r i s e could only be achieved by the co-opera-t i o n of the two governments and by a s s o c i a t i o n . w i t h the r a i l w a y s e n t e r p r i s e some l a r g e land scheme and scheme of emigration.56 c i t e d i n T r o t t e r , Canadian Federation, pp. 180-81. A l s o see, E. W. Watkins, Canada and the United S t a t e s , R e c o l l e c t i o n s 1851-1886 (London (1887)). 134 The long distance i m p e r i a l and f a r eastern t r a d e , drawn across B r i t i s h North America, was the whole reason behind the design f o r a transcon-t i n e n t a l r a i l w a y . As Watkins s a i d i n 1861: "Whatever n a t i o n possesses that highway, must w i e l d of n e c e s s i t y the commercial sceptre of the w o r l d " . 5 7 The Grand Trunk had f a i l e d to capture the trade of the American midwest, but i n the Northwest, American r i v a l r y would not be a f a c t o r . Watkins, a c t i n g i n the i n t e r e s t of the Grand Trunk, and more gener a l -l y , as the l i a i s o n between E n g l i s h and Canadian c a p i t a l i s t s and the Colo-n i a l O f f i c e , continued to promote the I n t e r c o l o n i a l Railway p r o j e c t , the securing of.communications across the west, and the proposal f o r the union of the c o l o n i e s . In 1862, the B r i t i s h North American A s s o c i a t i o n was e s t a -b l i s h e d i n London. I t brought together and coordinated a number of power-58 f u l E n g l i s h c a p i t a l i s t s ; Watkins was appointed as i t s r e p r e s e n t a t i v e . The avowed purpose of the A s s o c i a t i o n was to spread i n f o r m a t i o n on Canada and to persuade the B r i t i s h Government that r a i l r o a d s and other communica-t i o n f a c i l i t i e s i n B r i t i s h North America served an important I m p e r i a l f u n c t i o n . The r e a l o b j e c t , however, was to f u r t h e r c o l l a b o r a t i o n between 5 7 c i t e d i n R i c h , Hudson's Bay Company, V o l . I l l , p. 826. 58 The A s s o c i a t i o n included Thomas Baring and George Glyns, as w e l l as r e p r e s e n t a t i v e s from other powerful merchant banks i n London, such as M. R o t h s c h i l d & Company, Alexander G i l l e s p i e and other d i r e c t o r s of the Bank of B r i t i s h North America, Lloyd's and others; Robert Benson of the North West T r a n s i t Company; d i r e c t o r s of the Trust & Loan Company of Upper Canada; Samuel Cunard; d i r e c t o r s of the Canada Company; J . N. Berens, Governor of the Hudson's Bay Company; o f f i c i a l s of the E l e c t i c and I n t e r -n a t i o n a l Telegraph Company; and Newcastle, the C o l o n i a l Secretary, was behind i t . See, T r o t t e r , Canadian Federation, p. 193; R i c h , Hudson's Bay  Company, p. 828; G a l b r a i t h , The Hudson's Bay Company as an Im p e r i a l F a c t o r , p. 369. 135 B r i t i s h and Canadian c a p i t a l i s t s and to i n f l u e n c e the B r i t i s h Government 59 to provide f i n a n c i a l a i d f o r the I n t e r c o l o n i a l r a i l w a y p r o j e c t . The I n t e r c o l o n i a l would connect the Grand Trunk system of the St. Lawrence w i t h the Maritime Provinces, and a year-round i c e - f r e e port would f a c i l i t a t e i n t e r - p r o v i n c i a l trade. The impending abrogation of the Re-c i p r o c i t y Treaty and the threat by the Americans of a b o l i s h i n g the bond-ing p r i v i l e g e s increased the expected economic advantages e s p e c i a l l y f o r 60 the merchant c l a s s of Montreal of the proposed f e d e r a t i o n and r a i l w a y . The I n t e r c o l o n i a l would a l s o complete the i m p e r i a l trade nexus, l i n k i n g the P a c i f i c to the A t l a n t i c , and through the increase i n t r a f f i c , make the Grand Trunk, and the commercial system of the St. Lawrence, an economic success. The promoters of the I n t e r c o l o n i a l , however, were unable to se-cure f u r t h e r government a s s i s t a n c e under the e x i s t i n g circumstances, and i n order to achieve t h i s end, E n g l i s h f i n a n c i a l c a p i t a l threw i t s f u l l weight behind confederation. As Dorion suggested i n the Parliamentary De-bates on Confederation: ...the Confederation of a l l B r i t i s h North American Provinces n a t u r a l l y suggested i t s e l f to the Grand Trunk o f f i c i a l s as the surest means of b r i n g i n g w i t h i t the c o n s t r u c t i o n of the I n t e r c o l o n i a l Railway. (Hear, Hear, and l a u g h t e r . Such was the o r i g i n of 59 G a l b r a i t h , Hudson's Bay Company as an I m p e r i a l F a c t o r , p. 369. 60 Gait wrote: "The present s t a t e of the case i s that Canada i s at t h i s moment at the mercy of the American Congress f o r the continuence of her trade between December and June....The r e p e a l of the American Bonding Laws would at once a r r e s t the whole commerce of the province....The only s e c u r i t y we h a v e . . . l i e s i n the value of our trade to t h e i r r a i l w a y s we have none i n the p o l i c y of t h e i r government. Canada has no other i n t e r e s t i n the I n t e r c o l o n i a l Railway than to be forced from a p a i n f u l s t a t e of subordination to the United S t a t e s . . . " ( c i t e d i n 0. D. Skelton, L i f e and  Times of S i r A. T. Gait (Toronto, Oxford U n i v e r s i t y Press, 1920), p. 245). 136 t h i s Confederation scheme. The Grand Trunk people are at the bottom of i t ; and I f i n d that at the l a s t meeting of the Grand Trunk Railway Company, Mr. Watkins d i d i n advance congratulate the share-holders and bondholders on the b r i g h t prospects opening before them, by the enhanced value which w i l l be given to t h e i r shares and bonds, by the ad-op t i o n of the Confederation scheme and the construc-ts t i o n of the I n t e r c o l o n i a l as part of the scheme. x The i n t e r c o l o n i a l was not the only p r o j e c t that absorbed Watkins' energy. In 1863, the I n t e r n a t i o n a l F i n a n c i a l S o c i e t y purchased the Hud-62 son's Bay Company. At the center of the purchasing group was Watkins, and behind him stood Newcastle, though he had no f i n a n c i a l i n t e r e s t i n the t r a n s a c t i o n . Watkins' i n i t i a l z e a l f o r a r a i l w a y to the P a c i f i c gave way to the more immediately f e a s i b l e p r o j e c t of a road and tele g r a p h . In 1862, the A t l a n t i c and P a c i f i c T r a n s i t and Telegraph Company was formed, but Watkins, unable to s o l i c i t f i n a n c i a l a s s i s t a n c e from the government, or a grant of land i n a i d of c o n s t r u c t i o n , opened n e g o t i a t i o n s w i t h the 6 3 object of purchasing the Hudson's Bay Company. Behind the t r a n s c o n t i n -e n t a l scheme stood E n g l i s h f i n a n c i a l c a p i t a l , e s p e c i a l l y George Glyns and Robert Benson: the telegraph p r o j e c t and the purchase of the Hudson's Bay Company o f f e r e d good investment o p p o r t u n i t i e s . In Canadian p o l i t i c s , 61 Parliamentary Debates on the Subject of Confederation (Ottawa, The Queen's P r i n t e r , 1951), p. 250-51. 62 see, R i c h , Hudson's Bay Company, V o l . I l l , chapter XXIX; G a l b r a i t h , Hudson's Bay Company as an Im p e r i a l F a c t o r , chapter 17, 18; T r o t t e r , Canadian Fed e r a t i o n, chapter XX. 63 E a r l i e r , Baring and, Glyns had approached the C o l o n i a l O f f i c e , under the advocacy of Watkins, w i t h a proposal f o r a telegraph l i n e and r i g h t of way to the P a c i f i c . The C o l o n i a l O f f i c e , however, responded that i t could o f f e r no "pecuniary a s s i s t a n c e " , and had "no power to make any grant f o r the purpose" from Rupert's Land, but i t would undertake to sponsor "some concession of lan d " from Canada and B r i t i s h Columbia. See, 137 MacDonald, C a r t i e r , and the Grand Trunk i n t e r e s t s "gave t h e i r b l e s s i n g to the new venture as an escape from the prospect of westward expansion un-64 der the vigorous f r o n t i e r p o l i c y of George Brown and the 'Clear G r i t s ' " . When the shares of the reorganized company were f l o a t e d on the open mar-k e t , " i t o f f e r e d as the major inducement to investment the l u r e of l u c r a -65 t i v e r e t u r n s from land s a l e s " . The new company, however, f a i l e d to 66 l i v e up to i t s prospectus, which emphasized settlement and c o l o n i z a t i o n , and besides i r r i t a t i n g a l a r g e number of i n v e s t o r s , the Hudson's Bay Com-pany continued to e x i s t much as i t had i n the past. One f a c t o r d i d change, however: "The Company's stock had quadrupled i n value, and the p r i c e r e -6 7 quired to purchase the Company's r i g h t s had consequently increased". (F) Conclusion The f u t u r e of B r i t i s h Columbia, l i k e the question of Rupert's Land, cannot be i s o l a t e d from that of Canadian f e d e r a t i o n . The entry of B r i -t i s h Columbia i n t o the f e d e r a l union has i t s r o o t s i n the d r i v e by E n g l i s h f i n a n c i a l c a p i t a l , i n a l l i a n c e w i t h the merchant and f i n a n c i a l i n t e r e s t s Chester M a r t i n , "'Cominion Lands' P o l i c y " , i n W. A. Mackintosh & W. L. G. Joerg (ed.), Canadian F r o n t i e r s of Settlement, V o l . I I (Toronto, Mac M i l l a n , 1938), p. 217. 64 M a r t i n , "'Dominion Lands' P o l i c y " , op_. c i t . , p. 217. 65 John G a l b r a i t h , "The Hudson's Bay Land Controversy, 1863-1869", The M i s s i s s i p p i V a l l e y H i s t o r i c a l Review, V o l . XXXVI, no. 3 (1949), p. 459. 6 6 "But many feat u r e s of the o r g a n i z a t i o n suggested stocks r a t h e r than settlement" (Martin, '"Dominion Lands' P o l i c y " , o_p_. c i t . , p. 217). 67 G a l b r a i t h , Hudson's Bay Company as an I m p e r i a l F a c t o r , p. 390. 138 of Montreal, to create a u n i f i e d commercial system within the context of B r i t i s h imperialism. Confederation was the work of a few B r i t i s h investors i n c o l o n i a l s e c u r i t i e s and a hand-f u l of Montreal wholesale merchants and f i n a n -c i e r s who created the Canadian state i n t h e i r own image. As commercial c a p i t a l i s t s they created a commercial state to further t h e i r c l a s s i n t e r e s t s . . . The new strategy was "one of mercantilism, of consolidation and expansion 69 within a strong state strucgure". The a c q u i s i t i o n and development of a western hinterland was an i n t e g r a l part of t h i s strategy, and Confedera-t i o n , with a strong c e n t r a l government, was expected to strengthen Canada's i n t e r n a t i o n a l c r e d i t standing, as well as to promote i n t e r - p r o v i n c i a l trade for a strengthened l o c a l market. As Harold Innis said: Federation was a device to secure ample supplies of c a p i t a l f o r the construction of railways from the A t l a n t i c to the P a c i f i c i n a region handicapped by concentration on staples such as f u r , timber, and a g r i c u l t u r a l products and without an i r o n and s t e e l industry. 7("* Confederation granted the c e n t r a l government a l l those powers required to promote and stimulate economic development. 7 1 As one student of h i s t o r y has written: R. T. Naylor, "The History of Domestic and Foreign C a p i t a l i n Canada", i n Robert Laxer (ed.), Canada Ltd., The P o l i t i c a l Economy of  Dependency (Toronto, McClelland & Stewart, 1973), p. 45. 69 "Naylor, "The Third Commercial Empire of the St. Lawrence", op. c i t . , p. 12. Also see, Donald Smiley, "Canada and the Quest for a National P o l i c y " , Canadian Journal of P o l i t i c a l Science, Vol. VII, no. 1 (March, 1975), pp. 42-44. 7 0 Innis, Essays i n Canadian Economic History, ed. by M. Q. Innis (Toronto; U n i v e r s i t y of Toronto Press, 1956), p. 313; also see Innis, "Iron and Steel, Wheat and Finance", i n Problems of Staple Production  i n Canada (Toronto, 1933). see, D. G. Creighton, " B r i t i s h North America at Confederation", 139 In economic terms Confederation was e s s e n t i a l l y an instrument of p u b l i c f inance whose object i t was to make a v a i l a b l e to those r e s p o n s i b l e f o r e f f e c t i n g investment, the resources necessary f o r the u n i f i e d economic development of the B r i t i s h c o l o n i e s i n North America. I t was based on a fundamental p r o j e c t of economic growth. 7^ Report of the Royal Commission on Dominion-Provincial R e l a t i o n s (Ottawa, 1940), e s p e c i a l l y the chapter, " D i v i s i o n of Economic Powers at Confed-e r a t i o n " . A l f r e d Dubuc, "The D e c l i n e of Confederation and the New N a t i o n a l -ism", i n Peter R u s s e l l (ed.), N a t i o n a l i n Canada (Toronto, McGraw-Hill Ryerson, 1966), p. 114. 140 VI THE ECONOMIC STRUCTURE OF COLONIAL BRITISH COLUMBIA  (A) I n t r o d u c t i o n The economic s t r u c t u r e of c o l o n i a l B r i t i s h Columbia was completely d i f f e r e n t from the economic s t r u c t u r e of England. The Province of B r i t i s h Columbia was born at the end of an unprecedented p e r i o d of i n d u s t r i a l growth i n England, and t h i s f a c t i s c r u c i a l i n the understanding of the economic and s o c i a l development of c o l o n i a l B r i t i s h Columbia. The dominant mode of production i n England i n the nineteenth century was that of i n d u s t r i -a l c a p i t a l i s m . The economic s t r u c t u r e of c o l o n i a l B r i t i s h Columbia, on the other hand, was not organized around i n d u s t r i a l p roduction, but was a colon-i a l economy i n the s t r i c t sense of the word. I t was organized around the production and export of s t a p l e products: f i r s t s e a - o t t e r and other f u r s , and then w i t h progressive i n t e n s i t y , gold, c o a l , timber and f i s h . The econ-omy of B r i t i s h Columbia has not changed i n i t s b a s i c s t r u c t u r e since the l a t e c o l o n i a l p e r i o d ; i t has remained an economy centered around the ex t r a c -t i o n of n a t u r a l resources. Today, as R. A. Shearer p o i n t s out, B r i t i s h Columbia produces a f a s c i n a t i n g range of products f o r i n t e r n a l consumption and f o r export, and B r i t i s h Co-lumbians engage i n a correspondingly wide range of produc-t i v e a c t i v i t i e s . And ye t , throughout a l l of t h i s d i v e r s i t y , there i s a common d e n o m i n a t o r — d i r e c t o r i n d i r e c t depen-dence oh the e x t r a c t i o n of n a t u r a l resources, p a r t i c u l a r l y f o r e s t , mineral and water resources.^ The b a s i c s t r u c t u r e of the economy, then, has not changed si n c e the c o l o n i a l p e r i o d . I t has become more complex and there has occured marked s h i f t s i n the r e l a t i v e importance of c e r t a i n s t a p l e s , but e s s e n t i a l l y the economic s t r u c t u r e has not a l t e r e d over the l a s t one hundred years. The c a p i t a l i s m 1 R. A. Shearer, "The Economy", i n Shearer (ed.), E x p l o i t i n g Our  Economic P o t e n t i a l (Toronto, H o l t , Rinehart & Winston, 1968), p. 8. 141 of B r i t i s h Columbia grew out of the c o l o n i a l s t a p l e s trade. (B) The Dominant Staple The economic s t r u c t u r e of the Colony of B r i t i s h Columbia was very simple: i t was an economy organized around the production and export of s t a p l e commodities. The production of f u r , gold, and l a t e r timber, c o a l and other m i n e r a l s , and f i s h products were the l e a d i n g s e c t o r s of the economy and set the pace f o r development. Three c l a s s e s of i n d u s t r i e s can be seen at work i n the economy. F i r -s t , there was the b a s i c i n d u s t r y concerned w i t h the production of a s t a p l e f o r s a l e outside of the r e g i o n . Fur was c l e a r l y the dominant s t a p l e up to the discovery of gold on the Fraser R i v e r i n 1857. A f t e r that date, the production and export of gold dominated the economic a c t i v i t y of the r e g i o n . Between 1858 and 1865 i t was estimated that $18,503,411 worth of gold was 2 exported. The t o t a l production of gold from 1858 to 1876 was estimated at 3 4 $39,956,618. Gold production, however, began to d e c l i n e a f t e r 1863, and i n i t s place new s t a p l e s were emerging that would e v e n t u a l l y f a r outshine the l u s t r e of gold. As e a r l y as 1852, 1,840 tons of c o a l had been shipped 2 Paul P h i l i p s , "Confederation and the Economy of B r i t i s h Columbia", i n Shelton (ed.), B r i t i s h Columbia and Confederation ( V i c t o r i a , U n i v e r s i t y of V i c t o r i a P r ess, 1967), p. 46. 3 H. A. I n n i s & A. R. M. Lower ( e d t s . ) , S e l e c t Documents i n Canadian  Economic H i s t o r y , 1783-1885 (Toronto, U n i v e r s i t y of Toronto Press, 1933), p. 789. 4 T o t a l gold production "increased from $750,000 i n 1858, to $3,913,563 i n 1863, and d e c l i n e d w i t h f l u c t u a t i o n s to $1,336,956 i n 1870 and )$1,786,648 i n 1876. I b i d . 142 to San F r a n c i s c o , and by 1869, n e a r l y one-half of a t o t a l production of 40,883 tons was e x p o r t e d . 5 S i m i l a r l y , by the l a t e 1860s s i z a b l e amounts of timber were being exported from the sawmills of Burrard I n l e t to the coun-t r i e s of the P a c i f i c Rim; and the export of f i s h products, w h i l e only amounting to $37,706 i n 1872, was to climb i n t o the m i l l i o n s of d o l l a r s by the l a t e 1880s and e a r l y 1890s. 7 A second c l a s s of i n d u s t r y that was present i n c o l o n i a l B r i t i s h Co-lumbia were the a u x i l i a r y or secondary i n d u s t r i e s that provided inputs or a s e r v i c e f o r the b a s i c i n d u s t r y . A prime example of t h i s type of i n d u s t r y would be the l o c a l nanufacture of c a p i t a l goods. This s o r t of i n d u s t r y , however, was not present i n B r i t i s h Columbia. Most of the machinery used i n the more c a p i t a l - i n t e n s i v e phase of the mining advance, i n the construc-t i o n of sawmills, or i n the o u t f i t t i n g of ships b u i l t i n the r e g i o n was im-ported e i t h e r from London or San F r a n c i s c o . By f a r the l a r g e s t part of t h i s category was made up of e i t h e r other s t a p l e i n d u s t r i e s , i n d u s t r i e s that had not as yet developed to any great extend, or i n d u s t r i e s that provided a s e r v i c e , such as shipping and trade. The f o r e s t i n d u s t r y , f o r example, d i d not at f i r s t develop because of a demand created by an export trade. I t i n i t i a l l y developed to provide lumber f o r the c o n s t r u c t i o n of mining towns and i n the manufacture of flumes and s l u i c e boxes used i n the e x t r a c t i o n of 5 I b i d . , p. 800. 6 see, F. W. Howay, " E a r l y Shipping i n Burrard I n l e t , 1863-1870", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . I (1937), pp. 2-20. For a b r i e f o u t l i n e of the h i s t o r y of the lumber i n d u s t r y i n B r i t i s h Columbia i n the c o l o n i a l p e r i o d , see, J . C. Lawrence, Markets and C a p i t a l : A H i s t o r y of the Lumber Industry i n B r i t i s h Columbia (M.A. Thesis, U n i v e r s i t y of B r i -t i s h Columbia, 1957), pp. 1-37. 7 B r i t i s h Columbia, Economic C o u n c i l , S t a t i s t i c s of Industry i n B r i - t i s h Columbia, 1871-1934 ( V i c t o r i a , 1935), Table 5, no page number. In 1894 the export of the products of the f i s h e r i e s t o t a l l e d $3,541,305. 143 gold on the Fraser R i v e r and i n the Cariboo, and a f t e r the i n t r o d u c t i o n of shaft-mining i n the Kootenay r e g i o n , the timber used f o r p i t props and b r a -g ces. This s i t u a t i o n was opposite to the case of the lumber trade i n eas-t e r n Canada, where the great m e t r o p o l i t a n demand of Great B r i t a i n v i r t u a l l y c a l l e d i n t o existence t h i s h i n t e r l a n d product and d i c t a t e d the q u a n t i t y to 9 be produced and s o l d , and the p r i c e . Shipping and trade predominated throughout the c o l o n i a l p e r i o d as the main a u x i l a r y i n d u s t r i e s . There was no great m e t r o p o l i t a n demand that created a t h r i v i n g i n d u s t r y based on a s t a p l e other than gold. Much of the growth of lumber and c o a l exports i n the e a r l y p e r i o d "was dependent on the search f o r a balanced cargo on the part of v e s s e l s b r i n g i n g i n l a r g e q u a n t i t i e s of goods f o r a mining community Merchandising and t r a n s p o r t a t i o n , i n c l u d i n g the e a r l y development of banks that emerged w i t h the express business and the handling of gold-dust and bars, were the primary i n d i r e c t e f f e c t of the development of the gold s t a p l e The t h i r d c l a s s of i n d u s t r y that can be found i n the Colony of B r i t i s h Columbia were the i n d u s t r i e s i n v o l v e d i n the production of goods and ser-v i c e s f o r the domestic consumer. Since the days of the f u r t r a d e , a g r i c u l -t u r e has remained p r i n c i p a l l y o r i e n t e d to domestic consumption. This pat-t e r n has remained the case to the present day, d e s p i t e the f a c t that some a g r i c u l t u r a l products are e x p o r t e d — n o t a b l y apples and c a t t l e . The Hudson's Bay Company set up a separate company, the Puget's Sound A g r i c u l t u r a l Com-g see, Harold I n n i s , Settlement and Mining F r o n t i e r (Toronto, 1936), chapters v - v i . 9 A. R. M. Lower, Great B r i t a i n ' s Woodyard: B r i t i s h North America and  the Timber Trade, 1763-1863 (Montreal & London, McGill-Queens U n i v e r s i t y Press, 1973). 1 0 I n n i s & Lower, Select Documents, p. 797. 144 pany, to attempt to o f f s e t the hi g h cost of t r a n s p o r t a t i o n caused by the one-way t r a f f i c i n f u r s . The r e s t r i c t i v e l i m i t s imposed by the Hudson's Bay Company and the monopoly i n a g r i c u l t u r e and land by the Puget's Sound Company discouraged the development of an a g r i c u l t u r a l i n d u s t r y during the period of Colonial-Company-Rule. These r e s t r i c t i v e l i m i t s were removed some-what toward the end of the p e r i o d , and t h i s encouraged, i n conjunction w i t h the high p r i c e s i n f o o d s t u f f s , investment i n a g r i c u l t u r e , d i a r y i n g and ran-ching. But these i n d u s t r i e s never managed to develop to the po i n t where sub-s t a n t i a l amounts of c a p i t a l were accumulated. A g r i c u l t u r e was a mere ad-junct to the b a s i c s t a p l e i n d u s t r i e s ; i t remained b a s i c a l l y a p r o v i s i o n i n g i n d u s t r y . B r i t i s h Columbia r e l i e d on the im p o r t a t i o n of a g r i c u l t u r a l goods. The importation of wheat and f l o u r from C a l i f o r n i a and Oregon to V i c t o r i a c o n t r i b u t e d to a l a c k of development i n the growth of c e r e a l s on Vancouver I s l a n d . 1 1 This d i d c o n t r i b u t e , however, to the growth of breweries and d i s t i l l e r i e s around V i c t o r i a . "In 1870 i t had 4 breweries and 2 d i s t i l l e r -i e s and New Westminister had one d i s t i l l e r y producing 300 to 400 gall o n s per 12 month". While B r i t i s h Columbia d i d export animal and animal products, such as wool and h i d e s , these were e s s e n t i a l l y a by-product of the p r o v i s i o n -. . 13 xng trade. 1 1 I b i d . , p. 794. 1 2 I b i d . , p. 795 . 13 For example, i n 1872 B r i t i s h Columbia exported $215,000 worth of animal and animal products. See, R. E. Caves & R. H. Holton, The Canadian  Economy (Cambridge, Mass., Harvard U n i v e r s i t y P ress, 1959), p. 218. 145 (C) Resource E x t r a c t i v e Economy I t i s c l e a r that of the three c l a s s e s of i n d u s t r y , the b a s i c s t a p l e producing i n d u s t r y was dominant. I t was around the export base of the s t a p l e that economic development occured. The a u x i l i a r y i n d u s t r i e s e x i s t e d only to s e r v i c e the production and export of s t a p l e commodities. Some of these i n d u s t r i e s , notably the production of lumber and f i s h , d i d e v e n t u a l l y become important s t a p l e i n d u s t r i e s i n t h e i r own r i g h t . Manufacturing of inputs f o r the s t a p l e i n d u s t r i e s was very l i m i t e d . While i t i s true that a small iron-works was e s t a b l i s h e d at V i c t o r i a i n 1862, i t was b a s i c a l l y a 14 small s c a l e operation engaged mainly i n ship b u i l d i n g a c t i v i t i e s , and a very l a r g e number of c a p i t a l goods continued to be i m p o r t e d . 1 5 Shipping and t r a n s p o r t a t i o n was an important s u b s i d i a r y to the s t a p l e i n d u s t r y . Several companies, the Wells Fargo Express, B a l l o u ' s Fraser R i v e r Express, J e f f r a y ' s Express, and Freeman's Express, were engaged i n t r a n s p o r t i n g gold, and a number of companies and s h i p p i n g firms were engaged i n the l i v e l y p r o v i s i o n i n g and export trade. A l l of these i n d u s t r i e s , however, were sub-s i d i a r y to the b a s i c s t a p l e producing i n d u s t r y . The employment and income derived from the a c t i v i t y of these i n d u s t r i e s provided a market f o r consum-e r - o r i e n t e d i n d u s t r i e s , but even here the i n s t a b i l i t y of demand and the f l u c -14 J . M. S. C a r e l e s s , "The Business Community i n the E a r l y Development of V i c t o r i a " , op. c i t . , p. 115. Of a t o t a l of 17 steamers operating i n and out of B r i t i s h Columbia i n 1870, 9 had been b u i l t i n V i c t o r i a , and of 28 schrooners, 18 were b u i l t i n V i c t o r i a ( I n n i s & Lower, Seclect Documents, p. 800). 1 5 During the e a r l y 1860s a t h r i v i n g i n d u s t r y engaged i n the manufacture of mining equipement appeared i n San F r a n c i s c o . In 1861, 1,000 men were employed i n t h i s i n d u s t r y . See, Rodman W. P a u l , C a l i f o r n i a Gold, The Be- g i n i n g of Mining i n the Far West ( L i n c o l n , U n i v e r s i t y of Nebraska Press, 1947), p. 187. San Francisco dominated the manufacturing and trade i n mining equipement not only i n i t s own immediate h i n t e r l a n d , but a l s o i n that of B r i t i s h Columbia's. 146 t u a t i o n s i n employment discouraged development beyondJthat of a very sim-pl e k i n d . The nature of the economic base can best be seen by l o o k i n g at s t a -t i s t i c s on exports. As Table I i n d i c a t e s , n e a r l y 75% of a l l exports i n 1872 were products of the mines. Most of t h i s was gold, but i t a l s o i n c l u -ded some c o a l . The gold s t a p l e was the dominant s t a p l e throughout the 1860s, TABLE I Export of Commodities from B r i t i s h Columbia, 1872 United States T o t a l Products of Mines Forest Products F i s h Products Animal & Animal Products Manufacturies $1,300,597 11,409 1,370 $1,389,585 214,377 37,706 215,000 1,540 TOTAL $1,858,050 Source: B.C., Economic C o u n c i l , S t a t i s t i c s of Industry, Tables T 5, T 6, T 7, and T 8, no page numbers. and mining remained the b a s i c i n d u s t r y par e x c e l l e n c e u n t i l the e a r l y 1900s. In 1870 more than 2,300 men were employed as gold miners, t h i s was consider-16 ably lower than the high point of 4,400 i n 1864, but i t s t i l l represented the l a r g e s t employer i n the r e g i o n . 1 d B.C. Economic C o u n c i l , S t a t i s t i c s of I ndustry, Table M 30, no page number. 147 Mining continued to dominate the economy of B r i t i s h Columbia throughout the r e s t of the nineteenth century. By 1881 i t was l e s s im-portant as an export i n comparison to what i t had been, but i t s t i l l ac-counted f o r 60% of the t o t a l . During the same p e r i o d , however, f i s h pro-d u c t i o n had increased t e n f o l d (see Table I I on the f o l l o w i n g page). In 1882, 1883 and 1888 the export of f i s h products exceeded $1,000,000. And i n terms of employment, the f i s h i n g i n d u s t r y equalled that of mining and a g r i c u l t u r e : i n 1881 between 2,600 and 2,800 persons were engaged i n e i t h e r mining, f i s h i n g or a g r i c u l t u r e . 1 7 Manufacturing a l s o expanded during t h i s p e r i o d : 2,900 persons were employed i n t h i s f i e l d . I t must be remembered, however, that the term "manufacturing" i s i n no way to be i n t e r p r e t e d as a true secondary i n d u s t r y . Manufacturing was very much a s u b s i d i a r y i n -dustry to the b a s i c s t a p l e i n d u s t r i e s and was mainly i n v o l v e d i n the low-l e v e l processing of s t a p l e products. This can be seen by the f a c t that of the 2,900 persons l i s t e d under t h i s category, at l e a s t h a l f were i n "pre-served a r t i c l e s of food", 400 persons were employed i n sawmills, and the 18 r e s t i n s m a l l - s c a l e manufacturing. Fur as a s t a p l e commodity was of n e g l i g i b l e importance by the l a t e 1880s, and gold had been d i s p l a c e d by the products of the f i s h e r i e s i n terms of value of production (see Tabel I I ) . The production of p l a c e r gold had c o n t i n u a l l y d e c l i n e d f rom the "boom—days" of the 1860s; by the end of the century, i t was being replaced by the production of lode g o l d , which r e q u i r e d a great d e a l more c a p i t a l and o r g a n i z a t i o n than the r e l a t i v e l y 1 7 From the Census of Canada, c i t e d i n Caves & Holton, The Canadian Economy, p. 219. I b i d . TABLE I I The Value of Staple Exports From B.C., Selected Years; and The T o t a l Value of Production of M i n e r a l s i n Selected Years. 1872 1881 1891 1896 1911 EXPORTS , Products of Miness $1,289,585 $1,317,079 $2,930,229 $5,762,960 F i s h Products 37,706 400,984 2,274,654 3,288,776 Forest Products 214,377 162,7.47 394,996 685,740 TOTAL EXPORTS 1,858,050 2,231,554 5,986,766 10,289,908 TOTAL PRODUCTION OF: Pl a c e r Gold 1,046,753 429,811 544^.026 426,000 Lode Gold 1,244,180 4,725,513 S i l v e r 4,000 a 2,100,689 958,293 Copper 190,926 4,571,644 Lead 33,064 b 721,384 1,069,521 Coal 119,372° 685,071 C 3,087,291° 2,688,666 d Source: B.C., Economic C o u n c i l , S t a t i s t i c s of Industry, Tables T 2, T 5, T 6, T 8, and M 2. (a) $73,984 i n 1890 (b) 1892 (c) 1870. Source: G o s n e l l , B r i t i s h Columbia Year Book ( V i c t o r i a , 1901), p. 369. (d) By 1900 c o a l production equalled $4,318,785. I b i d . 149 inexpensive and " i n d i v i d u a l i s t i c " diggings of the p l a c e r gold era. Of even greater importance w i t h regard to the mining i n d u s t r y , however, was the emergence of new s t a p l e minerals i n the 1890s i n the Kootenay and Boundary reg i o n s . As Table I I shows, the production of s i l v e r , copper and lead (also z i n c ) i n c r e a s i n g l y captured a l a r g e r share of the t o t a l produc-t i o n of the mines. Throughout the l a s t t h i r d of the nineteenth century, the f o r e s t i n -dustry remained e s s e n t i a l l y a s u b s i d i a r y i n d u s t r y to the s t a p l e - e x p o r t s of the mines. The completion of the CPR i n 1886, however, s i g n a l l e d the r a p i d expansion of t h i s s t a p l e . The expansion of mining and s h i p p i n g , the open-ing of the P r a i r i e market, and the growth i n p o p u l a t i o n and of urban cen-t e r s generated a great demand f o r lumber. In 1881 there were only 27 saw-m i l l s i n B r i t i s h Columbia, by 1911, however, there were 224 f i r m s operating 19 i n l o g products, employing more than 15,000 persons. Nevertheless, i n terms of exports, f o r e s t products were s t i l l of minor importance i n com-pa r i s o n to what they were to become. In 1896, f o r example, f o r e s t products accounted f o r only about 6% of the t o t a l exports from the province. This was to change by the e a r l y 1900s. (D) P e r s i s t e n c e of The Economic S t r u c t u r e The b a s i c s t a p l e i n d u s t r i e s dominated the economy of B r i t i s h Columbia i n the c o l o n i a l p e r i o d . This p a t t e r n was maintained throughout the r e s t of the century and has continued to the present day. At the end of the c o l o n i a l p eriod the products of the mines, f o r e s t and f i s h e r i e s accounted f o r approximately 88% of t o t a l commodity exports; i n 1881 they accounted f o r about 84% of t o t a l exports; i n 1891, 93%; i n 1896, 94%; and as R. 1 9 I b i d . 150 Shearer p o i n t s out, by 1961 these three b a s i c s t a p l e s s t i l l accounted f o r 20 over 80% of a l l exports. The nature of the economic s t r u c t u r e of B r i t i s h Columbia i s even more apparent i f we look at s t a t i s t i c s on the d i s t r i b u t i o n of the labour f o r c e . As Table I I I i n d i c a t e s , the most n o t i c e a b l e aspect of the TABLE I I I D i s t r i b u t i o n of the Labour Force i n B r i t i s h Columbia, Selected Years 1870 a 1921 b 1961 b A g r i c u l t u r e 31% 16% 4% Staple I n d u s t r i e s 40 13 6 Manufacturing 7 16 20 Resource Processing 9 12 Other 7 8 C o n s t r u c t i o n 7 6 Services 22 44 61 Source: (a) Computed from Census of Canada 1870-71, V o l . IV, p. 377, c i t e d i n R. E. Caves & R. H. Holton, The Canadian Economy (Cam-br i d g e , Mass.: Harvard U n i v e r s i t y P r ess, 1959), V o l . I I , p. 217. In 1870 about 2,300 men were engaged i n mining, 1,800 i n a g r i c u l t u r e , 1,300 i n trade and about 400 i n manufacturing. (b) R. A. Shearer, "The Economy", i n Shearer (ed.), E x p l o i t i n g  Our Economic P o t e n t i a l , Table 3, p. 15. economy over the l a s t 100 years i s the steady decrease, i n terms of the percentage of the labour f o r c e , of those employed i n a g r i c u l t u r e and the s t a p l e i n d u s t r i e s . And conversely, the marked increase i n the importance of the manufacturing and s e r v i c e s e c t o r s . These f i g u r e s need to be i n t e r -R. A. Shearer, "The Economy", i n Shearer (ed.), E x p l o i t i n g Our Economic P o t e n t i a l , p. 9. 151 preted. The decrease i n the r e l a t i v e importance of a g r i c u l t u r e and the increase i n the r e l a t i v e importance of the s e r v i c e sector are not sur-p r i s i n g . What needs to be explained i s whether or not the increase i n manufacturing i s an i n d i c a t i o n of growing d i v e r s i f i c a t i o n and i n d u s t r i a l -i z a t i o n of the economy. The answer, on f u r t h e r examination, seems to be no. I f the s e r v i c e sector i s l e f t a s i d e , the greatest part of the increase in^employment over the century has occurred i n e i t h e r the s t a p l e i n d u s t -21 r i e s or i n resource processing. The category "manufacturing" can be misleading. In r e l a t i o n to the economy of B r i t i s h Columbia, i t . i s u s u a l l y used to designate the low l e v e l processing of s t a p l e products. Examples of t h i s type of resource processing are f i s h packing, sawmilling and the manufacture of plywood, the pulp and paper i n d u s t r y , and the smelting of primary metals such as l e a d , z i n c and aluminum. These are the i n d u s t r i e s that dominate the "manufacturing" s e c t o r , and none of them can be c o n s i d -ered t r u e secondary manufacturing a c t i v i t i e s . Commenting on the contemp-orary economy of B r i t i s h Columbia, Shearer w r i t e s : "There i s no evidence of true secondary manufacturing a c t i v i t i e s r e p l a c i n g resource-based a c t i v -22 i t i e s i n the economic base of the p r o v i n c i a l economy". (E) Conclusion To sum up t h i s chapter, then, i t appears to be quire evident that the s t r u c t u r e of the economy of c o l o n i a l B r i t i s h Columbia was that of a c o l o n -i a l economy organized around the production and export of s t a p l e commodi-t i e s . Staple exports were the lea d i n g sector of the economy and set the pace f o r development. I t was around the export sector that development I b i d . , p. 15. 22 I b i d . 152 occurred. The most s t r i k i n g aspect of t h i s development, however, was that the impact of the export a c t i v i t y on the domestic economy and s o c i e t y was l i m i t e d to the growth of s u b s i d i a r y i n d u s t r i e s d i r e c t l y dependent on e x t r a a c t i v e a c t i v i t i e s . C o l o n i a l . B r i t i s h Columbia was not an a g r i c u l -t u r a l l y based economy, nor has i t ever developed a s i g n i f i c a n t a g r i c u l t u r a l s e c t o r . The geography of the r e g i o n was o b v i o u s l y a l i m i t i n g f a c t o r f o r such development, but c o n t r a r y to popular myth, as l a t e as the 1950s, l e s s than 25% of the land c l a s s i f i e d as arable or p o t e n t i a l l y arable had been 23 developed as a g r i c u l t u r a l lands. A g r i c u l t u r e was, and has remained, es-s e n t i a l l y a simple p r o v i s i o n i n g i n d u s t r y o r i e n t e d to domestic consumption. With the exception of a few sawmills and some ship b u i l d i n g a c t i v i -t i e s , manufacturing was almost non-existent i n the c o l o n i a l economy, and, the manufacturing that d i d develop over the next century was involved i n low l e v e l processing of raw m a t e r i a l s . Other manufacturing that d i d em-erve, such as food processing and p r i n t i n g , was of a s m a l l - s c a l e nature and o r i e n t e d to the l o c a l market. In other words, the inducement to i n -vest i n the home-production of i n p u t s , i n c l u d i n g c a p i t a l goods, f o r the expanding export sector (backward l i n k a g e ) , and the inducement to i n v e s t i n i n d u s t r i e s using the output of the export i n d u s t r y as an input (forward 24 l i n k a g e ) was very s m a l l . Investment that d i d occur was i n the s t a p l e "To t h i s day, only 1,600.000 acres i n the province have been de-veloped as a g r i c u l t u r a l lands although 6,500,000 acres are c l a s s i f i e d as arable or p o t e n t i a l l y so". Robert E. C a i l , Land, Man, and the Law: The  D i s p o s a l of Crown Lands i n B r i t i s h Columbia, 1871-1913 (Vancouver: Univer-s i t y of B r i t i s h Columbia Press, 1974), p. 19. O r i g i n a l l y presented as a M. A. Thesis, UBC, 1956. < 2 A see, M. H. Watkins, "A Staple Theory of Economic Growth", i n W. T. Easterbrook & Watkins (eds.), Approaches to Canadian Economic  H i s t o r y (Toronto/Montreal: McClelland & Stewart, C a r l e t o n L i b r a r y No. 31, 1967), pp. 53-55. 153 i n d u s t r i e s or i n the expanding s e r v i c e s e c t o r . So f a r we have been d e s c r i b i n g the surface c h a r a c t e r i s t i c s of the economic s t r u c t u r e of c o l o n i a l B r i t i s h Columbia. These c h a r a c t e r i s t i c s have been gleaned from s t a t i s t i c s on production and exports at v a r i o u s p o i n t s i n time. This account has remained, however, at the l e v e l of des-c r i p t i o n , and has, as y e t , not attempted to analyze and e x p l a i n the r i s e and e v o l u t i o n of the economic s t r u c t u r e . This cannot be done u n t i l we have delved behind the surface appearance of t h i s s t r u c t u r e . We must now look at other aspects of the economy: the m e t r o p o l i t a n network, the nature and s t r u c t u r e of c a p i t a l , the s i z e and mode of u t i l i z a t i o n of the economic s u r p l u s , and u l t i m a t e l y the s o c i a l r e l a t i o n s that l i e behind the outward form of c a p i t a l . Such an examination w i l l lead to an explanation of why B r i t i s h Columbia was e v e n t u a l l y i n t e g r a t e d i n t o the new and expanding economy of Canada. 154 T l BRITISH COLUMBIA AND CONFEDERATION  (A) I n t r o d u c t i o n The l o g i c of B r i t i s h Columbia's development had i t s r o o t s w i t h i n the i n t e r n a t i o n a l context of B r i t i s h i m p e r i a l i s m . As we have seen, Great B r i t a i n was remarkably c o n s i s t e n t i n attempting to i n t e g r a t e the r e g i o n i n t o i t s own expanding economy. The B r i t i s h government used a v a r i e t y of techniques to e s t a b l i s h and maintain paramountcy i n the area. In t h i s chapter, I plan to examine the nature and character of B r i t i s h i m p e r i a l i s m i n the period f o l l o w -ing the d i s c o v e r y of gold on the Fraser R i v e r i n 1857... The discovery of gold brought the c o l o n i a l r u l e of the Hudson's Bay Company to an end; a f t e r 1858 the two c o l o n i e s of Vancouver I s l a n d and B r i -t i s h Columbia, and between 1866 and 1871, the u n i t e d colony of B r i t i s h Columbia, were d i r e c t l y administered by the Crown. I t marked the period of d i r e c t c o l -o n i a l r u l e . I t would be a mistake, however, to assume that the p e r i o d of B r i -t i s h c o l o n i a l r u l e was simply an extension of the m e r c n a t i l i s t p o l i c y of the Hudson's Bay Company, a p o l i c y that waa geared to maintaining an a r t i f i c i a l l y c l osed and m o n o p o l i s t i c a l l y c o n t r o l l e d t r a d i n g system. The road to Confedera-t i o n f o r B r i t i s h Columbia was p a r a l l e l e d by a s h i f t i n the economic s t r u c t u r e of England from merchant to i n d u s t r i a l c a p i t a l i s m . With the emergence of i n -d u s t r i a l c a p i t a l , the o l d conception of empire, based on the a l l e g e d advantages of c o n t r o l l i n g i m p e r i a l trade through the i m p o s i t i o n of m e r c a n t i l i s t r e s t r i c -t i o n s , was replaced by a new one based on an i n t e r n a t i o n a l d i v i s i o n of labour, w i t h Great B r i t a i n exchanging manufactured and c a p i t a l goods, financed by B r i t i s h loans and investments, f o r f o o d s t u f f s and raw m a t e r i a l s . During the Hudson's Bay Company p e r i o d , B r i t i s h expansion was p r i m a r i l y defensive i n nature; whereas on the other hand, during the period of B r i t i s h c o l o n i a l r u l e i t was much more aggressive i n c h a r a c t e r . B r i t i s h c a p i t a l a c t i v e l y sought out 155 trade and investment o p p o r t u n i t i e s . In other words, the massive growth of B r i t i s h i n d u s t r y placed new demands on B r i t i s h i m p e r i a l p o l i c y . I t was no longer a matter of c o n t r o l l i n g the exchange of surface s t a p l e products; the s t r a t e g y i n v o l v e d converting underdeveloped regions i n t o complementary h i n -t e r l a n d economies. Great B r i t a i n was able to maintain c o n t r o l over B r i t i s h Columbia and to preserve her s t r a t e g i c i n t e r e s t s i n the r e g i o n not only because of out-r i g h t p o l i t i c a l possession, but a l s o because of c a p i t a l investments and a s i g n i f i c a n t B r i t i s h i n f l u e n c e i n t r a d e , insurance, business personnel and f i n a n c e . The Colony was part of the London-Liverpool m e t r o p o l i t a n network. San Francisco d i d not exert the degree of power and i n f l u e n c e that the l i n e s of trade and communication would seem to suggest. In f a c t , San Francisco i t s e l f was a part of the London-Liverpool m e t r o p o l i t a n network. During the 1860s and 1870s the C a l i f o r n i a n trade i n wheat, as we w i l l see, was a p e r f e c t opportunity f o r B r i t i s h economic i m p e r i a l i s m . B r i t a i n was able to o b t a i n a measure of commercial supremacy and monopoly through the techniques of c a p i -t a l and commercial p e n e t r a t i o n . As one h i s t o r i a n has noted, San F r a n c i s c o , and i t s surrounding h i n t e r l a n d , was almost a c o l o n i a l appendage to Great B r i -t a i n during t h i s p e r i o d . The s t r a t e g y of i n t e g r a t i n g underdeveloped regions i n t o B r i t a i n ' s own expanding economy was demonstrated both i n the case of B r i t i s h Columbia and i n the case of C a l i f o r n i a ; o u t r i g h t p o l i t i c a l possession important though i t was i n maintaining the B r i t i s h i m p e r i a l connection was only a v a r i a b l e p o l i t i c a l f u n c t i o n of an expanding i n d u s t r i a l i z e d B r i -t i s h s o c i e t y . A t r i a n g l e of trade and c a p i t a l investment e x i s t e d between V i c t o r i a , San Francisco and London, and through London to Montreal. The im-portance of t h i s m e t r o p o l i t a n network i n t y i n g B r i t i s h Columbia to Great B r i t a i n , and u l t i m a t e l y to Canada, w i l l be demonstrated i n t h i s chapter. 156 (B) Gold and Commercial C a p i t a l i s m ( i ) Gold and Merchant C a p i t a l The d i s c o v e r y of gold on the Fraser River i n 1856-57, and the la r g e i n f l u x of miners that began i n A p r i l , 1858, completely transformed the pace of economic a c t i v i t y i n the r e g i o n . As Donald Creighton wrote: "Gold forced an a r t i f i c i a l , hot-house growth; i t supplied the energy of a power-f u l s t i m u l a n t " . 1 I t has been estimated that between 20,000 and 25,000 people 2 a r r i v e d i n V i c t o r i a i n the s p r i n g and summer of 1858, and that 6 of every 100 l e f t C a l i f o r n i a i n four months. The c o n d i t i o n s i n C a l i f o r n i a D. G. Creighton, " B r i t i s h North America at Confederation", Report  of the Commission on Domi n i o n - P r o v i n c i a l R e l a t i o n s (Ottawa, 1940), p. 32. Cf. H. A. I n n i s & A. R. M. Lower (eds.), Select Documents In Canad- ia n Economic H i s t o r y , 1783-1885 (Toronto, U n i v e r s i t y of Toronto Press, 1933), p. 791: "Gold i s a commodity which i s r e s p o n s i b l e f o r immediate r e s -ponse i n economic a c t i v i t y and f o r tremendous e f f o r t s i n moving commodities toward the mining area. I t s e x p l o i t a t i o n i s r a p i d , and d e p r e c i a t i o n of equipment e s s e n t i a l to i t s e x p l o i t a t i o n i n terms of a g r i c u l t u r e , i n d u s t r y , and transport f o l l o w s immediately. The e f f e c t s on the community concerned are such as c h a r a c t e r i z e an economic cyclone". For some e a r l y accounts of the gold rush on the Fraser see, R. C. Mayne, Four Years i n B r i t i s h Columbia and Vancouver I s l a n d (London, John Murry, 1862); Duthie, A Bishop i n the Rough (London, 1909); F. W. Howay, The E a r l y H i s t o r y of the Fraser River Mines ( V i c t o r i a , 1926, P u b l i c Archives  of B r i t i s h Columbia Memoir, no. 6); A l f r e d Waddington, The Fraser Mines  V i n d i c a t e d ( V i c t o r i a , 1858); Howay & E. 0. S c h o f i e l d , B r i t i s h Columbia from  the E a r l i e s t Times to the Present (Vancouver, S. J . C l a r k e , 1914), 4 v o l s . 2 An e a r l y h i s t o r i a n of San Fr a n c i s c o wrote: "The custom-house records say that between the twe n t i e t h of A p r i l and the n i n t h of August (1858), the l i m i t s of the Fraser f e v e r , f i f t e e n thousand and e i g h t y - e i g h t passengers l e f t San Francisco i n one hundred and twelve v e s s e l s f o r the new Eldorado; but the ' P r i c e s Current', a c a r e f u l l y e d i t e d commercial j o u r n a l , s a i d the number of adventurers was twenty-three thousand four hundred and twenty-eight, the re p o r t s to the custom-house being g r e a t l y below the t r u t h i n many cases" ( H i t t e l l , H i s t o r y of San F r a n c i s c o , p. 275, c i t e d i n Rodman W. P a u l , C a l i f - o r n i a Gold, The Beginning of Mining i n the Far West ( L i n c o l n , U n i v e r s i t y of Nebraska Press, 1947), pp. 177-78). W. J . Trimble, The Mining Advance i n t o the Inland Empire (Madison, Wisconsin, 1914), p. 28, estimated that another 8,000 reached the Fraser by land. 157 were favourable to t h i s s h i f t i n population: gold production had dropped, the new forms of mining required considerable c a p i t a l , and By 1858, many miners, who were reluctant to work for wages, were i n need of employment, As Howay, Sage and Angus wrote: "The rush, was i n r e a l i t y merely the tran s ^ porting of a part of C a l i f o r n i a and the P a c i f i c States to a land under the B r i t i s h f l a g " . 3 4 Merchant c a p i t a l dominated the emerging gold economy. The gold pro-duction of B r i t i s h Columbia between 1858 and 1867 t o t a l l e d more than $26 m i l l i o n . 5 The value of t h i s production was nearly a l l surplus, and most of 6 i t was exported to the United States. The part that remained behind, how-Howay, Sage & Angus, B r i t i s h . Columbia arid the. United States, p, 141. 4 Merchant c a p i t a l " . . . r e l i e s on regional s c a r c i t i e s of raw materials and goods to obtain high, p r i c e s extracted through, c r e d i t costs, transporta-t i o n rates, and merchandise mark-up. Merchant c a p i t a l , t y p i f i e d by a low r a t i o of fi x e d to c i r c u l a t o r y c a p i t a l , also needs rapid-turnover, and cannot undertake long-term r i s k y investment. It i s , therefore, oriented toward abetting the quick extraction of staple output, rather than i n d u s t r i a l pro-cessing" (Naylor, "The Third Commercial Empire of the St, Lawrence", op. c i t . , p. 21), 5 Trimble, The Mining Advance into the Inland Empire, p. 102. • 6 Between 1858 and 1867, i t was estimated that more than $23,600,000 worth of gold was exported from B r i t i s h . Columbia (Paul P h i l i p s , "Confedera-t i o n and the Economy of B r i t i s h . Columbia", i n Shelton (ed.) .Brjtish Columbla  and Corifederation ( V i c t o r i a , 1967), calculated from Appendix A, p c 61), Cf. Bancroft, History of B r i t i s h Columbia, V o l l XXXIT, p, v i i ; "As i n C a l i f o r n i a , i n A u s t r a l i a , and i n New-Zealand, the wealth, thus acquired was seldom turned to good account; and l i t t l e of i t remained to enrich, the country whence i t was gathered..." 158 ever, was appropriated by merchants, bankers and shipping f i r m s , and by i n t e r -mediaries of a l l k i n d s . There were a great number of these. Along w i t h the miners came an entourage of merchants, s p e c u l a t o r s , gamblers, and an a s s o r t -ment of s k i l l e d and u n s k i l l e d l abourers; as A l f r e d Waddington s a i d , they represented "...an i n d e s c r i b a b l e a r r a y of P o l i s h Jews, I t a l i a n fishermen, French cooks, jobbers, s p e c u l a t o r s of every k i n d , land agents, a u c t i o n e e r s , hangerson, and bummers, bankrupts and brokers of every d e s c r i p t i o n " . 7 With-i n s i x weeks of the s t a r t of the gold rush, 225 b u i l d i n g s were added to a v i l l a g e of 800 i n h a b i t a n t s , and of these, 200 were s t o r e s , 59 belonging to jobbers and importers. Not a l l of those a r r i v i n g i n V i c t o r i a were specula-t o r s and gamblers. Many e s t a b l i s h e d shipping l i n e s , w holesalers, importers, commission agents, express companies and banks s t a r t e d business. Samuel P r i c e and Company, Dickson, De Wolf and Company, and the Lowe Brothers, f o r example, opened o f f i c e s i n V i c t o r i a ; i n 1858 a branch of W e l l s , Fargo was e s t a b l i s h e d ; i n 1859, a branch of the Bank of B r i t i s h North America was opened, and i n 1862, the Bank of B r i t i s h Columbia commenced business. Most of the new f i r m s , however, represented an extension of the San Fra n c i s c o business community; one-half of the f i r m s a d v e r t i s i n g i n V i c t o r i a ' s f i r s t c i t y d i r e c t o r y were from San F r a n c i s c o . Gold miners were an i d e a l object of me r c a n t i l e e x p l o i t a t i o n , and the p r o v i s i o n i n g trade was a source of l a r g e p r o f i t s . A l o c a l i n h a b i t a n t of V i c t o r i a s a i d : A miner i s but the means of conveying money i n t o other people's pockets: he i s simply our agent, though he wouldn't acknowledge that p o s i t i o n . I can name to you 7 A l f r e d Waddington, The Fraser Mines V i n d i c a t e d , pp. 17-18. 8 I b i d . , p. 18. 159 a hundred miners who have made fortunes, and l o s t or spent them, f o r perhaps two who had been able to s t i c k to them. We townspeople have nothing to do but s i t on our beam-ends, and wait f o r these hard-working, deluded cr e a -tures to come and pour wealth i n t o our l a p s ! ^ Trade, brokerage fees and the e x p l o i t a t i o n of temporary and l o c a l s h o r t -ages of goods were not the only source of p r o f i t . Real e s t a t e deals and s p e c u l a t i o n a l s o provided l u c r a t i v e r e t u r n s on investment. Land p r i c e s soared i n 1858. Some town-lots i n V i c t o r i a , which were i n i t i a l l y s o l d f o r between $50 and $100, "were r e s o l d a month afterwards at p r i c e s v a r y i n g from f i f t e e n hundred and three thousand d o l l a r s , and more".^" The Hudson's Bay Company, which owned the water frontage and most of the good b u i l d i n g s i t e s near the harbour, p r o f i t e d from the increase i n land p r i c e s , as d i d a number of e n t e r p r i s i n g i n d i v i d u a l s . "There were about 30 holders of 10 or more downtown l o t s i n 1858". 1 1 For example: H.G. D a l l a s , R. F i n l a y s o n , James Yates, Donald McTavish ( a l l a c t i v e or r e t i r e d Hudson's Bay Company employees), John Helmcken, Begbie, Robert Kerr (government o f f i c i a l s ) , Rev. Modeste Demers, Bishop H i l l s , and Donald Fra s e r , the V i c t o r i a correspondent f o r the London Times, and l a t e r , along w i t h D a l l a s , an i n f l u e n t i a l member of the "London Committee f o r watching the a f f a i r s of B r i t i s h Columbia", were a l l l a r g e land h o l d e r s . Fraser held land valued at $250,000 i n 1862; Robert Kerr , a government a u d i t o r , had land valued at $20,000; and Helmcken's 12 and Finlayson's holdings were valued at $32,000 and $12,000 r e s p e c t i v e l y . 9 As t o l d to R. B. Johnson, Very Far West Indeed (London, 1872), pp. 47-48, c i t e d i n I n n i s & Lower, Select Documents, pp. 791-92, n. 4. ^ Waddington, The Fraser Mines V i n d i c a t e d , p. 19. 1 1 Harry Gregson, A H i s t o r y of V i c t o r i a , 1842-1970 ( V i c t o r i a , The V i c t o r i a Observer P u b l i s h i n g Co., 1970), pp. 22-23. I b i d . , p. 23. 160 ( i i ) V i c t o r i a : Regional M e t r o p o l i s The massive i n f l u x of n o n - B r i t i s h miners posed an immediate t h r e a t to B r i t a i n ' s i m p e r i a l i n t e r e s t s i n the P a c i f i c Northwest. James Douglas acted promptly to deal w i t h the s i t u a t i o n , but underlying h i s concern f o r m a i n t a i n i n g "law and order" was h i s d e s i r e to ensure the commercial sup-remacy of V i c t o r i a and to p r o t e c t the t r a d i n g r i g h t s of the Hudson's Bay Company. In December, 1857, Douglas, a c t i n g as Governor of Vancouver I s l a n d and as Chief Factor of the Hudson's Bay Company, issued a "proclamation" d e c l a r i n g that gold i n place belonged to the Crown and that i t could not be mined without the permission of the government. In order to mine gold a l i c e n c e was necessary, and the l i c e n c e could only be obtained i n V i c t o r i a . In May, 1858, Douglas issued another proclamation p r o h i b i t i n g trade on the mainland without a l i c e n c e from the Hudson's Bay Company and a sufferance from the C o l l e c t o r of Customs at V i c t o r i a . Douglas based h i s a c t i o n on the Company's l i c e n c e of e x c l u s i v e trade w i t h the Indians. A few weeks l a t e r , Douglas made a proposal to the P a c i f i c M a i l Steamship Company, an American f i r m that wanted to operate steamers between V i c t o r i a and the mining r e g i o n , under which the steamship company would only c a r r y Hudson's Bay Company goods and only passengers who had obtained a mining l i c e n c e at V i c t o r i a , and the company would compensate the Hudson's Bay Company by paying a $2 head-tax f o r each miner c a r r i e d to the Fraser R i v e r . L y t t o n , the C o l o n i a l Secretary, d i s a l l o w e d both of these proclama-t i o n s , but the d i s p a t c h d i d not reach Douglas u n t i l the f a l l of 1858. In the meantime, Douglas used the Royal Navy, which s t a t i o n e d a ship at the South Arm of the Fraser R i v e r , to enforce the l i c e n c i n g of miners and to 13 prevent the entry of other boats and v e s s e l s w i t h t r a d i n g goods. L y t t o n For a d i s c u s s i o n of the r o l e of the Royal Navy during the gold 161 t o l d Douglas that the Hudson's Bay Company "have no r i g h t to exclude strangers. They have had no r i g h t s of government, or of occupation of the s o i l . They have had no r i g h t to prevent or i n t e r f e r e w i t h any k i n d of 14 t r a d i n g except w i t h the Indians alone". And as L y t t o n had s a i d i n an e a r l i e r d i s p a t c h : A l l claims and i n t e r e s t s must be subordinated to that p o l i c y which i s to be found i n the peopling and opening up of the new country, w i t h the i n t e n -t i o n of c o n s o l i d a t i n g i t as an i n t e g r a l and impor-tant part of the B r i t i s h Empire.15 In August, 1858, the Colony of B r i t i s h Columbia was created by an act of the I m p e r i a l parliament, and Douglas, on c o n d i t i o n that he severed h i s f o r -mal connection w i t h the Hudson's Bay Company, was appointed Governor. The new Colony was to pay f o r i t s e l f and gold o f f e r e d a source of p r o s p e r i t y , but England would continue to provide, as L y t t o n s a i d , the " p r o t e c t i o n of 16 her navy, and i n times of emergency, of her troops". rush, see, Barry Gough, The Royal Navy and the Northwest Coast, chapter 6, pp. 131-49. 14 L y t t o n (August 14, 1858), c i t e d i n Howay, Sage & Angus, B r i t i s h  Columbia and the United S t a t e s , p. 149. 1 5 L y t t o n ( J u l y 1, 1858) c i t e d i n Derek P e t h i c k , V i c t o r i a , The Fort (Vancouver: M i t c h e l l Press, 1968), pp. 161-62. l o L y t t o n , c i t e d i n A. S. Morton, H i s t o r y of Canadian West to 1870-71 (London, T. Nelson & Sons (1939)), p. 772; a l s o c i t e d i n Gough, The Royal  Navy and the Northwest Coast, p. 142. B r i t a i n never sent to B r i t i s h Columbia a m i l i t a r y f o r c e , though Douglas repeatedly asked f o r one. The Royal Engineers, however, were used on the mainland to enforce B r i t i s h a u t h o r i t y (along w i t h the Gold Commis-sioners and Judge Begbie). See, Frances Woodward, "The Influence of the Royal Engineers on the Development of B r i t i s h Columbia", B.C. Studies, no. 24 (Winter 1974-75), pp. 3-51. 162 The establishment of V i c t o r i a as a f r e e port i n January, 1860, was designed to make V i c t o r i a the commercial center of the re g i o n . Douglas, i n a l l i a n c e w i t h the me r c a n t i l e e l i t e of the c i t y , wanted to channel econ omic a c t i v i t y v i a Vancouver I s l a n d and to f o s t e r a vigorous p r o v i s i o n i n g trade, e s p e c i a l l y a f t e r the d e c l i n e of business f o l l o w i n g the 1858 boom. As Ormsby wrote: His plan...was to make V i c t o r i a , r a t h e r than San Fr a n c i s c o , or the Puget Sound's p o r t s , or P o r t l a n d , the metropolis of the mining f i e l d s ; to d i r e c t trade to B r i t i s h f i r m s and to b u i l d up B r i t i s h imports; and to open the Fraser R i v e r , r a t h e r than the Columbia 17 route, as the avenue of trade and t r a f f i c . ' I t appears to have been s u c c e s s f u l : imports i n t o B r i t i s h Columbia from Vancouver I s l a n d rose from 162,529 pounds i n 1859 to 402,679 pounds i n 18 1862. Goods e n t e r i n g the Fraser R i v e r without being routed through V i c t o r i a were taxed h e a v i l y , r e t a r d i n g the development of New Westminister a a p r o v i s i o n i n g center. V i c t o r i a became the commercial, banking and s h i p -ping center of the region ; V i c t o r i a was the dominant metropolis and i t or ganized i t s h i n t e r l a n d around i t s e l f by p r o v i d i n g the necessary market t r a n s p o r t a t i o n system and f i n a n c i a l f a c i l i t i e s . In 1863, the B r i t i s h  Columbia C o l o n i s t wrote: So extensive has been the amount of c a p i t a l expended on m e r c a n t i l e appliances i n V i c t o r i a , so renumerative • .have those sources of wealth proved, so powerful i s the connection formed by our importers w i t h great shipping fi r m s i n England and other p a r t s of the world, and so incomparably r a p i d has been the general progress of the c i t y , that the c o l o s s a l dimensions i n t o which i t i s M. Ormsby, B r i t i s h Columbia: A H i s t o r y , p. 146. 18 P h i l i p s , "Confederation and the Economy of B r i t i s h Columbia", op. c i t . , p. 46. 163 destined to expand are already unmistakably f o r -showed, as the l e a d i n g mart of the sea-board north of San F r a n c i s c o . Nor would i t be a s t o n i s h i n g were i t to outmatch i n f u t u r e ages that renowned entrepot of C a l i f o r n i a . - ^ V i c t o r i a ' s f r e e trade p o s i t i o n was a constant source of grievance f o r the merchants and land speculators of New Westminister. The c a p i t a l i s t s of New Westminister wanted t h e i r c i t y to become the entrepot of the main-land, but most of the trade continued to flow to V i c t o r i a . V i c t o r i a was prospering on the trade and commerce of B r i t i s h Columbia; i t was estimated that during the height of the Cariboo gold rush (1862-63) the indebtedness 20 of B r i t i s h Columbia to V i c t o r i a was over $2 m i l l i o n . F r e d e r i c k Seymour, the Governor of B r i t i s h Columbia a f t e r 1864, and a supporter of the l o c a l c a p i t a l i s t s , s t a t e d the b a s i c grievance of the mainland i n 1865: The merchants and owners of town l o t s i n V i c t o r i a i n the comparatively unimportant Colony of Vancouver I s l a n d have drawn n e a r l y a l l the share i n p r o f i t s of gold d i s c o v e r i e s i n t h i s colony which have not been absorbed by C a l i f o r n i a . ^ To s a t i s f y the merchants of New Westminister, the Southern Boundary Act was passed i n December, 1860. The Act placed heavy custom d u t i e s on goods en-t e r i n g B r i t i s h Columbia through the southern i n t e r i o r . Throughout the c o l -o n i a l p e r i o d , however, the c o n f l i c t between V i c t o r i a and New Westminister remained a constant feature of the p o l i t i c a l scene. V i c t o r i a was the center of economic and p o l i t i c a l power, and though. New Westminister attempted to " f i g h t " back, i t maintained i t s s t a t u s as a r e g i o n a l m e t r o p o l i s u n t i l i t was unseated by Vancouver and the Canadian P a c i f i c Railway. 19 c i t e d i n Macfie, B r i t i s h Columbia and Vancouver I s l a n d , p. 101. 20 Trimble, Mining Advance i n t o the Inland Empire, p. 51. 21 c i t e d i n M. Ormsby, " F r e d e r i c k Seymour, The Forgotten Governor", B.C. Studies, no. 27 (Summer, 1974), p. 6. 164 ( i i i ) The F i n a n c i a l S t r u c t u r e The f i n a n c i a l s t r u c t u r e of B r i t i s h Columbia developed and grew out of the gold rush; i t was geared to f a c i l i t a t i n g the e x p l o i t a t i o n and move-ment of s t a p l e products and goods over long d i s t a n c e s . The f i n a n c i a l s t r u c -t u r e emerged to complement the commercial system^ The e a r l i e s t banking 22 s e r v i c e s were provided by forwarding houses and express companies: Wells Fargo and Company and Freeman's Express, both American companies, were examples i n t h i s regard. MacDonald's Bank, e s t a b l i s h e d i n 1859, was the 23 f i r s t i n s t i t u t i o n to o f f e r f u l l banking s e r v i c e s . The Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia, however, soon emerged as the dominant f i n a n c i a l i n s t i t u t i o n s i n the re g i o n . Both of these banks were c o n t r o l l e d from London, and both operated under Royal Charters. Their dom-inant p o s i t i o n was enhanced by the passing of the Bank Note Act i n 1864. This Act p r o h i b i t e d a l l banks, except those w i t h Royal Charters, or those 24 having issued before J u l y 1, 1864 from i s s u i n g notes to pass as money. The Bank of B r i t i s h North America, which opened a branch i n V i c t o r i a i n 1859, was the banker f o r the c i t y of V i c t o r i a and the government of Vancou-ver I s l a n d . The Bank of B r i t i s h Columbia, chartered i n London i n 1862 w i t h an i n i t i a l c a p i t a l stock of 250,000 pounds, became the banker f o r the Colony of B r i t i s h Columbia, and s u b s t a n t i a l l y provided f o r the f i n a n c i a l r e q u i r e -ments of the Colony. The Bank of B r i t i s h Columbia a l s o e v e n t u a l l y acquired 22 see, Howay & S c h o l e f i e l d , B r i t i s h Columbia From the E a r l i e s t Times  to the Present, chapter XXI, "Banks and Banking"; R. Mclvor, Canadian  Monetary and Banking and F i s c a l Development (Toronto, 1958). 23 see, R. L. Reid, "The F i r s t Bank i n Western Canada", Canadian  H i s t o r i c a l Review, V o l . V I I (December, 1926). 24 MacDonald's Bank was the only other bank that had issued notes before t h i s date. I t f a i l e d , however, a f t e r a c o n t r o v e r s i a l robbery i n 1964. 165 the l e a d i n g accounts among the merchant-traders, and i t d i d a considerable business, along w i t h the Bank of B r i t i s h North America, MacDonald's Bank and Wells Fargo, i n exchange, d i s c o u n t i n g b i l l s and making advances to t r a d e r s . For the f i r s t few years i n t e r e s t charges were very high; the d i s -count on b i l l s ranged from 18% per year f o r 30 days to 36% f o r 60-90 days. B r i t i s h Columbia's commercial community was very much dependent upon the Bank of B r i t i s h Columbia f o r advances to pay o f f outside c r e d i t o r s ; as V i c t o r Ross s a i d : " . . . t h e i r a b i l i t y to c a r r y on business became e n t i r e l y 25 dependent upon the continued generosity of the Bank". The f i n a n c i a l system that developed i n c o l o n i a l B r i t i s h Columbia s p e c i a l i z e d i n short term, s e l f - e x t i n g u i s h i n g c r e d i t . The banks exer c i s e d a f u n c t i o n that was pur e l y monetary, and t h e i r c r e d i t p r a c t i c e was based on the needs of merchants and shipping i n t e r e s t s . The f i n a n c i a l s t r u c t u r e d i s -c r iminated against long term advances to a g r i c u l t u r e and small i n d u s t r i a l e n t e r p r i s e s . The major exception was long term advances to the State, which u n l i k e other investments, represented a l o w - r i s k venture. The State was an important debtor f o r both the Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia. Both banks, but e s p e c i a l l y the Bank of B r i t i s h Columbia, a s s i s t e d m a t e r i a l l y i n the f i n a n c i n g of the State by r a i s i n g long term, f i n -a n c i a l c a p i t a l on the bond markets i n London. The economic s t r u c t u r e of c o l o n i a l B r i t i s h Columbia was that of commercial c a p i t a l i s m . The business community was i n t e r e s t e d i n commerce rath e r than production, and the f i n a n c i a l s t r u c t u r e complemented the com-m e r c i a l system by p r o v i d i n g a l i q u i d c r e d i t system. The banks served a V i c t o r Ross, A H i s t o r y of the Imperial Bank of Commerce (Toronto, Oxford U n i v e r s i t y Press, 1920), V o l . I , p. 311. 166 monetary f u n c t i o n and not the f u n c t i o n of c a p i t a l formation. The c a p i t a l requirements of the business community involved the p r o v i s i o n of short term, merchant c a p i t a l , and throughout the 1860s, the p r o v i s i o n of long term, f i n a n c i a l c a p i t a l remained a major problem. As the demand f o r r e -sources increased, however, business ventures that r e q u i r e d long term, f i x e d c a p i t a l d i d appear on the scene, and c a p i t a l flowed i n t o the r e g i o n . B r i t i s h f i n a n c i a l c a p i t a l , m o b i l i z e d on the formal money markets of London, financed most of these e n t e r p r i s e s . The Vancouver I s l a n d Coal Mining Com-pany and the Harewood Coal Mining Company, two E n g l i s h f i r m s , e x p l o i t e d the c o a l - f i e l d s of Nanaimo; Anderson and Company, a London f i r m of shipowners and shipbrokers, came to Vancouver I s l a n d i n 1860 and e s t a b l i s h e d a sawmill at A l b e r n i Canal; Captain Stamp s t a r t e d a sawmill on Burrard I n l e t w i t h c a p i t a l r a i s e d i n London; and companies l i k e the C o l o n i a l S e c u r i t i e s Com-pany L t d . , and l a t e r , the B r i t i s h Columbia Investment and Loan S o c i e t y , d i r e c t e d E n g l i s h c a p i t a l not only i n t o c o l o n i a l bonds, but a l s o i n t o r e a l e s t a t e , mortgages, loans, and i n t o the development of g r i s t m i l l s and grav-i n g docks. But nev e r t h e l e s s , merchant c a p i t a l , which was w e l l adapted to gathering up and exchanging surface products, dominated the economy of c o l o n i a l B r i t i s h Columbia, and i t s dominance prevented or blocked the economic surplus from being channelled i n t o the sphere of production. The c r e d i t system provided short term c r e d i t and d i s c r i m i n a t e d against long term c a p i t a l e n t e r p r i s e s . ( i v ) T r a n s p o r t a t i o n and the P u b l i c Debt B r i t i s h Columbia lacked a commercial i n f r a s t r u c t u r e i n 1858, and as the gold " f r o n t i e r " moved f u r t h e r i n l a n d , i t became apparent that an im-proved t r a n s p o r t a t i o n system was needed. The c o n s t r u c t i o n of roads and harbour f a c i l i t i e s were designed not only to f a c i l i t a t e the movement of 167 goods and to reduce the high co s t s of t r a n s p o r t a t i o n , but a l s o to enhance p o l i t i c a l c o n t r o l and to ensure that the mining regions remained f i r m l y t i e d to the V i c t o r i a - F r a s e r R i v e r route. The l a t t e r concern was emphasized by the f a c t that American c a p i t a l i s t s were attempting to penetrate the mining regions by developing t r a n s p o r t a t i o n f a c i l i t i e s from the Puget Sound and through the 26 southern i n t e r i o r . The c o n s t r u c t i o n of the H a r r i s o n - L i l l o o e t route, coupled w i t h the l i c e n c i n g system and the Southern Boundary Act, and the opening of the Cariboo Road i n 1864, however, ensured the commercial dominance of the Fraser R i v e r route. )• The Cariboo Road g r e a t l y reduced the cost of shipping goods to the i n -t e r i o r ; i t was a l s o r e s p o n s i b l e f o r the massive increase i n p u b l i c indebtedness. The t r a n s p o r t a t i o n system of B r i t i s h Columbia was b u i l t almost e n t i r e l y by 27 p u b l i c c a p i t a l . The Cariboo Road, f o r example, cost $1,500,000 to b u i l d ; and $600,000 of t h i s amount was borrowed by the government. The Bank of B r i -t i s h Columbia, a c t i n g as the agent of the government of B r i t i s h Columbia, r a i s e d most of the c a p i t a l ; i t d i d t h i s e i t h e r by p l a c i n g the government debentures on the London money market, or by purchasing the i s s u e s of debentures themselves 26 see, Howay, Sage & Angus, B r i t i s h Columbia and the United S t a t e s , pp. 150-54. 27 P r i v a t e c a p i t a l attempted to c o n s t r u c t a wagon-road from Butte I n l e t to the i n t e r i o r i n order to gain complete c o n t r o l of the commerce and trade of the mining r e g i o n . A l f r e d Waddington, who was granted a government c h a r t e r , promoted and acted as the c o n t r a c t o r f o r the p r o j e c t , and a number of prominent V i c t o r i a c a p i t a l i s t s provided f i n a n c i a l backing. V i c t o r i a s p e c u l a t o r s pur-chased l o t s at the town-site l a i d out by the Royal Engineers. The p r o j e c t ended i n f a i l u r e a f t e r an Indian u p r i s i n g took the l i v e s of 19 workmen. See, Ormsby, B r i t i s h Columbia, pp. 205-07. 168 28 and then r e s e l l i n g them on the London market as buyers could be found. The Bank of B r i t i s h Columbia a l s o advanced money to the c o n t r a c t o r s b u i l d i n g the Cariboo Road. By the end of 1865, both the government of Vancouver I s l a n d and the government of B r i t i s h Columbia were h e a v i l y i n debt to the Bank. (v) P u b l i c Finance and Regional Union Gold production began to d e c l i n e a f t e r 1863 and i n 1864 the commercial boom ass o c i a t e d w i t h the Cariboo gold rush came to an end. The extensive c r e -d i t system that had been b u i l t up to f a c i l i t a t e the e x p l o i t a t i o n and movement of gold c o l l a p s e d about the merchants, t r a d e r s , and bankers of V i c t o r i a and New Westminister. Between 1864 and 1865, the Bank of B r i t i s h Columbia made la r g e advances over $1,000,000 at V i c t o r i a ; these advances, which r e s t e d on r e a l e s t a t e and unsecured o v e r d r a f t s to merchants, were too l a r g e f o r the banks resources, and the bank found i t s e l f i n serious f i n a n c i a l d i f f i c u l t i e s , 29 d i f f i c u l t i e s that i t was unable to overcome u n t i l the 1870s. MacDonald's Bank, which had over $60,000 of i t s own notes i n c i r c u l a t i o n , f a i l e d i n 30 November, 1864. The economic doldrums were r e f l e c t e d i n the p u b l i c finances of the two 31 c o l o n i e s . The main sources of revenue were mining and l i q u o r l i c e n c e s , the s a l e of p u b l i c l a n d , and i n the Colony of B r i t i s h Columbia, a custom t a r i f f 28 320. Ross, A H i s t o r y of the Canadian Bank of Commerce, V o l . I , p. 264, 29 I b i d . , p. 311. 30 Ormsby, B r i t i s h Columbia, p. 212. 31 see, Peter Palmer, A F i s c a l H i s t o r y of B r i t i s h Columbia i n the  C o l o n i a l P e r i o d (Ph.d Thesis, Standford, 1932); Murray D. Bryce, The Finances  of the Government of B r i t i s h Columbia (B. A. Essay, U.B.C., 1949); B r i t i s h Columbia, B r i t i s h Columbia i n Canadian Confederation, ( V i c t o r i a , King's P r i n t e r , 1938). For a general d i s c u s s i o n of the s o c i a l , economic and p o l i -t i c a l h i s t o r y of the p e r i o d , see, Ormsby, B r i t i s h Columbia, chapter 8, pp. 197-230. 169 32 and road taxes and t o l l s . But i n each of the years between 1861 and 1865, 33 both c o l o n i e s experienced s u b s t a n t i a l budget d e f i c i t s . The t o t a l debt of B r i t i s h Columbia increased from $26,000 i n 1860, to $458,650 i n 1862, to $1,189,830 i n 1865; the increase was p r i m a r i l y the consequent of the expansion of the t r a n s p o r t a t i o n system. The t o t a l debt c f Vancouver I s l a n d increased from $4,440 i n 1860 to $200,000 i n 1865. In 1866, the year of the union of the c o l o n i e s , the t o t a l debt amounted to $1,406,777, and more than one-quarter of the c o l o n i a l revenues were going to pay the i n t e r e s t charges des p i t e the i m p o s i t i o n of custom d u t i e s at V i c t o r i a . S i x months before union, Vancouver Is l a n d ' s o v e r d r a f t at the Bank of B r i t i s h North America stood at almost $80,000 and the bank refused f u r t h e r advances unless authorized by the London 34 d i r e c t o r s . And the Colony of B r i t i s h Columbia, which was h e a v i l y i n debt to the Bank of B r i t i s h Columbia, was on the verge of bankruptcy. In 1869, taxes (customs, e x c i s e , road taxes, road t o l l s ) accounted f o r 78% of the revenue of B r i t i s h Columbia; l i c e n c e s and fees accounted f o r 10%; and the p u b l i c domain (land s a l e s , land revenue, mining c e r t i f i c a t e s , mining r e c e i p t s ) accounted f o r 5% (Bryce, The Finances of the Government of B r i t i s h Columbia, p. 3). 33 see, P h i l i p s , "Confederation and the Economy of B r i t i s h Columbia", op. c i t . , Appendix B, "Revenue, Expenditure and Debt f o r Vancouver I s l a n d and B r i t i s h Columbia: 1859-1870", p. 62. A l l of the f o l l o w i n g f i g u r e s on p u b l i c finance are taken from t h i s appendix. P. B. Waite, The L i f e and Times of Confederation, 1864-1867 (Toronto, U n i v e r s i t y of Toronto Press, 1962), p. 314. Ormsby, B r i t i s h Colum- b i a , p. 216, says that the o v e r d r a f t was i n the Bank of B r i t i s h Columbia. 170 The f i n a n c i a l weakness of the two c o l o n i e s forced t h e i r union i n 1866. As F. A. Howay s a i d : The s p e c t a c l e of the two c o l o n i e s , w i t h a p o p u l a t i o n l e s s than that of a t h i r d - r a t e c i t y , staggering along w i t h a debt of over one hundred d o l l a r s a head, and w i t h two governors, two c h i e f - j u s t i c e s , two a t t o r n e y s -general, and so on down the l i s t , seems more^like a page from "opera bouffe" than from h i s t o r y . And as Donald Creighton wrote: The Union of Upper and Lower Canada i n 1841 had been, to a l a r g e extent, the r e s u l t of the f i n a n c i a l weak-ness of Upper Canada and the need f o r a stronger f i s c a l base to support the completion of the St. Lawrence canals. I t was, even more o b v i o u s l y , the f i n a n c i a l weakness of B r i t i s h Columbia and Vancouver I s l a n d , and the need of combined stre n g t h to support the d e c l i n e of p l a c e r - m i n i n g ^ which forced union of the two P a c i f i c provinces i n 1866. I t was expected that the c o n s o l i d a t i o n of the c o l o n i e s would strengthen the Colony's c r e d i t standing i n London, reduce the costs of government and ad-m i n i s t r a t i o n , and enhance B r i t i s h power and a u t h o r i t y i n the P a c i f i c North-west. Several years e a r l i e r , Newcastle had attempted to create a r e g i o n a l union s i m i l a r to that being planed f o r Canada and the maritime c o l o n i e s ; but, the intense r i v a l r y between the c a p i t a l i s t s of Vancouver I s l a n d and B r i t i s h Columbia postponed h i s p l a n . At the time, the p r o s p e r i t y a s s o c i a t e d w i t h gold production, promised a secure economic base, d e s p i t e the added costs of government. The f i n a n c i a l d i f f i c u l t i e s of the two c o l o n i e s , however, forced the i s s u e . The C o l o n i a l O f f i c e favoured union; i n London, the Hudson's Bay Company, the Bank of B r i t i s h Columbia and the i n v e s t o r s i n c o l o n i a l bonds, the Howay, B r i t i s h Columbia, The Making of a Province, p. 163; a l s o c i t e d i n Creighton, " B r i t i s h North America at Confederation", op_. c i t . , p. 34.. Creighton, " B r i t i s h North America at Confederation", op_, c i t . , pp. 34-35. 171 E n g l i s h c a p i t a l i s t s who had invested c a p i t a l i n c o a l , sawmills and land, and the Royal Navy, which wanted to " e l i m i n a t e d i f f i c u l t i e s faced by the Command-37 e r - i n - C h i e f , P a c i f i c , i n d e a l i n g w i t h two c o l o n i e s i n s t e a d of one" were able to overcome the o p p o s i t i o n of Governor Seymour and the l o c a l business community of New Westminister. On November 19, 1866, the c o l o n i e s of Vancouver I s l a n d and B r i t i s h Columbia were u n i t e d under one Governor. The union of the two c o l o n i e s d i d not g r e a t l y help the s i t u a t i o n . P r o s p e r i t y ended w i t h the subsiding of the gold rush; p o p u l a t i o n d e c l i n e d , revenues f e l l , and the s e r v i c i n g of the p u b l i c debt remained a major problem. By 1867 the net debt of the colony t o t a l l e d n e a r l y $1,500,000, added to which 38 was a current loan from the Bank of B r i t i s h Columbia or $280,000. In November, 1867, Governor Seymour appealed to the I m p e r i a l government f o r an emergency grant of 50,000 pounds to meet the f i n a n c i a l c r i s i s , apparently without success, and i n 1868, the Bank of B r i t i s h Columbia announced i t s i n -39 t e n t i o n of charging 18% on the government's overdrawn account. Douglas confided to A. G. D a l l a s : The s i t u a t i o n here i s not improved trade i s d u l l , people are g r a d u a l l y dropping o f f property and r e n t s are low, the Revenue f a r short of expenditures, p u b l i c s a l a r i e s i n a r r e a r s and things g e n e r a l l y are l o o k i n g dismal and gloomy... 4^ 37 Gough, The Royal Navy and the Northwest Coast, p. 218 38 Waite, The L i f e and Times of Confederation, p. 315. 39 W. N. Sage, "The C r i t i c a l P e r iod of B r i t i s h Columbia H i s t o r y , 1866-1871", P a c i f i c H i s t o r i c a l Review, V o l . I (1932), p. 428. ^ (November 8, 1867) c i t e d i n Ormsby, " F r e d e r i c k Seymour", op_. c i t . , p. 14. 172 As the 1860s drew to a c l o s e , B r i t i s h Columbia was i n a s t a t e of depression. I t was w i t h i n t h i s context that the question of B r i t i s h Columbia's f u t u r e development became a "burning" i s s u e on the l o c a l p o l i t i c a l scene. (C) The M e t r o p o l i t a n Network ( i ) The Influence of San Francisco Commercial c a p i t a l i s m i n B r i t i s h Columbia d i d not develop i n i s o l a t i o n . The economic and p o l i t i c a l development of the r e g i o n was a h i s t o r i c a l pro-duct of the r e l a t i o n between the dominant m e t r o p o l i t a n centers and the Colony. V i c t o r i a was the dominant commercial center of the r e g i o n , but at the same time, the c i t y was dominated by, and subordinate t o , l a r g e r m e t r o p o l i t a n centers. San F r a n c i s c o was the major metropolis of the P a c i f i c coast. Howay, Sage and Angus wrote: San F r a n c i s c o was V i c t o r i a ' s connecting l i n k w i t h the outside world. The shipping l i n e s to the P a c i f i c Northwest, to Panama, and across the P a c i f i c had t h e i r headquarters i n San F r a n c i s c o , which a l s o became the terminus of the Union P a c i f i c Railway i n 1869.^1 San Francisco was the main source of supply f o r the mining advance. In 1857 the t o t a l value of imports to V i c t o r i a from San F r a n c i s c o amounted to only $29,448; i n the s i n g l e month of J u l y , 1858, however, they rose to $808,954; 4 2 and i n 1861 they equalled $1,151,000; i n 1862, $2,387,000; and i n 1863, $1,940,000. On the other hand, the t o t a l value of imports from Great B r i t a i n to V i c t o r i a equalled $457,000 i n 1861, $703,000 i n 1862, and 43 $1,294,000 i n 1863. In terms of exports, over 75% of the t o t a l exports 41 Howay, Sage, & Angus, B r i t i s h Columbia and the United States, p. 184. 42 Ormsby, B r i t i s h Columbia, p. 141. 43 Macfie, Vancouver I s l a n d and B r i t i s h Columbia, pp. 106-07. 173 from B r i t i s h Columbia were to the United States i n 1872 (see Table I V ) . Gold accounted f o r most of these exports, and i f i t i s excluded, the per-centage was co n s i d e r a b l y l e s s . In 1869, f o r example, only about 50% of the t o t a l exports from B r i t i s h Columbia, excluding g o l d , were to the United 44 States, and the f i g u r e was approximately 40% i n 1870. With the exception of g o l d , then, the United States was not a major market f o r the s t a p l e products of B r i t i s h Columbia. The demand of the United States f o r lumber, f o r i n s t a n c e , was of no importance i n s t i m u l a t i n g the de-velopment of t h i s s t a p l e product. The sawmills of the Northwest s t a t e s provided ample s u p p l i e s of lumber f o r the San Francisco market, and, during the e a r l y c o l o n i a l p e r i o d , V i c t o r i a r e l i e d on the m i l l s of the Puget Sound area f o r much of the lumber used i n c o n s t r u c t i o n . The export of f o r e s t pro-ducts from Vancouver I s l a n d and B r i t i s h Columbia during the c o l o n i a l p eriod went p r i m a r i l y to the United Kingdom and the P a c i f i c Rim c o u n t r i e s (see Table V). San Francisco maintained i t s dominant p o s i t i o n only i n terms of the p r o v i s i o n i n g trade, shipping and communications. The m e t r o p o l i t a n i n f l u e n c e of San F r a n c i s c o was obviously great; but, when a wider p e r s p e c t i v e i s used, a pe r s p e c t i v e that takes i n t o c o nsidera-t i o n the t o t a l framework of c a p i t a l i s t expansion on the P a c i f i c Coast, the importance of San F r a n c i s c o ' s i n f l u e n c e becomes diminished as a determining f a c t o r i n B r i t i s h Columbia's economic and p o l i t i c a l development. San Fran-c i s c o d i d not exert the degree of power and c o n t r o l that the l i n e s of trade and communications would seem to suggest. For behind the r e g i o n a l metro-p o l i t a n network there e x i s t e d o l d e r , and c o n t i n u i n g , m e t r o p o l i t a n i n f l u e n c e s P h i l i p s , "Confederation and the Economy of B r i t i s h Columbia", op. c i t . , c a l c u l a t e d from Appendix C, "Exports and Imports of B r i t i s h C o l -umbia: Selected Years", p. 63. 174 TABLE IV TOTAL EXPORTS FROM BRITISH COLUMBIA, 1872 TO: Great B r i t a i n $ 224,944 A u s t r a l i a 23,149 New Zealand 5,688 B r i t i s h A f r i c a 3,739 TOTAL BRITISH EMPIRE 257,520 China 49,711 Hawaiian Islands 33,779 C h i l e 55,700 Peru 50,473 United States 1,405,217 TOTAL ALL COUNTRIES OTHER THAN BRITISH EMPIRE 1,600,530 TOTAL ALL COUNTRIES 1,858,050 Source: B.C., Economic C o u n c i l , S t a t i s t i c s of Industry, op. c i t . , Tables T 1, T 2, no page numbers TABLE V EXPORT OF FOREST PRODUCTS FROM THE BURRARD INLET MILLS, 1870 Rough Lumber Dressed Lumber a Spars P i c k e t s Laths Shingles United Kingdom 190,803 • 780 New S. Wales 356,517 24,307 88,000 V i c t o r i a (Aust. ) 1,605,040 15 China 1,507,537 37 15,000 73,700 156,000 Mexico 377,489 65,941 C h i l e 266,458 Sandwich I s . 973,000 127,000 635,000 Peru 2,150,222 1,116,327 T a h i t i 117,007 33,634 Source: adapted Lumber i n t o t a b l e from Trade i n B r i t i s h data i n J . Columbia" C. (M. Lawrence, "Markets and C a p i t a l : A. Thesis, UBC, 1957), p. 27. A H i s t o r y of the a) i n board f e e t 176 that acted not only.to i n t e g r a t e B r i t i s h Columbia i n t o B r i t a i n ' s expanding economy, but a l s o to l i n k San Francisco and i t s surrounding h i n t e r l a n d to the B r i t i s h m e t r o p o l i s . ( i i ) T r i a n g l e of Trade and Investment The disc o v e r y of gold i n 1849 and the r a p i d commercial development of C a l i f o r n i a a t t r a c t e d B r i t i s h c a p i t a l and trade to the American P a c i f i c Coast. A number of B r i t i s h f i r m s moved i n t o C a l i f o r n i a to take advantage of the ex-panding commercial o p p o r t u n i t i e s . During the gold rush, San Fran c i s c o import-i' ed not only manufactured goods but a l s o a la r g e q u a n t i t y of f o o d s t u f f s . By the e a r l y 1860s, however, C a l i f o r n i a ' s g r a i n production g r e a t l y exceeded domestic consumption, and the n e c e s s i t y of marketing the surplus became a major problem. Since the r e p e a l of the Corn Laws, B r i t a i n r e l i e d i n c r e a s -45 i n g l y on f o r e i g n s u p p l i e s to meet i t s demand f o r f o o d s t u f f s , and as the world's l e a d i n g importer, the United Kingdom q u i c k l y emerged as the major buyer of C a l i f o r n i a n wheat and f l o u r . In the f i r s t f i v e months of 1860, a l -most one-half of the t o t a l amount of wheat and f l o u r exported from C a l i f o r n i a went to Great B r i t a i n , and by 1867, the f i g u r e had r i s e n to almost 80% of the t o t a l . 4 6 An important t r i a n g u l a r trade developed between B r i t a i n , A u s t r a l i a and A s i a , and C a l i f o r n i a . B r i t i s h manufactured goods were shipped to A u s t r a l i a -A s i a , then A u s t r a l i a n c o a l was c a r r i e d to San Fr a n c i s c o , and f i n a l l y , C a l i -f o r n i a n wheat and f l o u r was picked up and transported to B r i t a i n . B r i t i s h 45 During the 1850s, nearly 30% (annual average) of the wheat a v a i l a b l e for consumption i n B r i t a i n was derived from overseas sources; by the l a t e 1860s and early 1870s, the f i g u r e had increased to almost 50% of the t o t a l (Rodman W. Paul, "The Wheat Trade Between C a l i f o r n i a and the United Kingdom", M i s s i s s i p p i Valley H i s t o r i c a l Review, Vol. XIV (1958-59), p. 398). 46 Paul, "The Wheat Trade Between C a l i f o r n i a and the United Kingdom", op. c i t . , p. 395, 396. 177 shipping i n t e r e s t s and B r i t i s h marine insurance dominated the wheat trade. And the c r e d i t system that emerged to f a c i l i t a t e the movement of t h i s s t a p l e 47 product was l a r g e l y the domain of B r i t i s h Banks. C a l i f o r n i a was an a t t r a c -t i v e f i e l d f o r the investment of outside c a p i t a l i n the 1860s, and funds 48 flowed i n t o the State i n l a r g e amounts. The Commercial Bank of I n d i a , an E n g l i s h merchant bank e s t a b l i s h e d i n 1845, opened a branch i n San F r a n c i s c o i n 1863; i n the s p r i n g of 1864, the B r i t i s h and C a l i f o r n i a Banking Company, w i t h i t s head o f f i c e i n London, took over the banking and exchange business of 49 Faulkner, B e l l and Company; i n 1862, a branch of the Bank of B r i t i s h Columbia was e s t a b l i s h e d ; a branch of the Bank of B r i t i s h North America5*"* opened f o r business i n 1864; and the London and San F r a n c i s c o Bank, owned by ten E n g l i s h and German banking companies, opened a branch i n San F r a n c i s c o , as w e l l as one i n New York, i n 1865. Rodman W. Paul wrote: I f a l l t h i s suggests a high degree of B r i t i s h i n -f l u e n c e , then i t does no more than s t a t e the t r u t h . The C a l i f o r n i a trade was an almost p e r f e c t opportunity f o r V i c t o r i a n economic i m p e r i a l i s m . Here were openings 47 see, i b i d . , p. 404. 48 I r a B. Cross, Financing an Empire: H i s t o r y of Banking i n C a l i f o r n i a , 4 volumes (Chicago, San F r a n c i s c o & Los Angeles, 1927), v o l . I , pp. 255-59. 49 "During the f i r s t t h i r t y years of i t s e x i s t e n c e , the San F r a n c i s c o branch of the Bank of B r i t i s h Columbia was one of the three outstanding banks i n C a l i f o r n i a " ( I b i d . , p. 257). 5 ^ "During the many years of i t s s u c c e s s f u l c a r e e r , i t c a r r i e d on a general deposit and commercial banking business, c l a i m i n g as i t s c l i e n t s many of the l e a d i n g business men and f i r m s not only of San F r a n c i s c o , but a l s o of the State at l a r g e " ( I b i d . ) . 178 f o r B r i t i s h s h i p p i n g , insurance, and f i n a n c e , t o -gether w i t h at l e a s t a l i m i t e d market f o r B r i t i s h , - ^ and c o l o n i a l c o a l and B r i t i s h manufactured goods. The trade i n wheat "made r u r a l C a l i f o r n i a and m e r c a n t i l e San Fra n c i s c o almost 52 a c o l o n i a l appendage to V i c t o r i a n B r i t a i n " . As the trade grew between C a l i f o r n i a and B r i t a i n , E n g l i s h m e r c a n t i l e houses e i t h e r e s t a b l i s h e d branch o f f i c e s i n San Fra n c i s c o or r e l i e d on ex-53 e l u s i v e American correspondents. B a l f o u r , Guthrie and Company was an example of the d i r e c t extension of B r i t i s h merchant and f i n a n c i a l c a p i t a l . The f i r m o r i g i n a t e d as a branch of B a l f o u r , Williamson and Company, a L i v e r -pool f i r m that had been in v o l v e d i n South American trade s i n c e the e a r l y 1850s. The company extended i t s operations to San Fra n c i s c o i n the l a t e 1860s, and i t soon became one of the dominant commission agencies and shippers on the P a c i f i c Coast. B a l f o u r , Guthrie and Company was p r i m a r i l y engaged i n me r c a n t i l e o p e r a t i o n s , but i t a l s o acted as an important channel f o r i n v e s t i n g both i t s own and B r i t i s h c a p i t a l i n lumbering, c o a l mining, salmon f i s h e r i e s , farm mortgages, ranching and land development p r o j e c t s . I t served as the West Coast r e p r e s e n t a t i v e of a S c o t t i s h and B r i t i s h insurance company and acted as the agent f o r a v a r i e t y of E n g l i s h i n v e s t o r s . As Morton R o t h s t e i n s a i d , B a l -f o u r , Guthrie and Company "played a r o l e i n those i s o l a t e d but r a p i d l y d e v e l -oping s t a t e s which i s analogous to that performed by the Barings i n the East 5 1 P a u l , "The Wheat Trade Between C a l i f o r n i a and the United Kingdom", op. c i t . , p. 405. 52 I b i d . , p. 412. 53 see, Morton R o t h s t e i n , "A B r i t i s h Firm on the American West Coast, 1869-1914", Business H i s t o r i c a l Review, V o l . XXXVIII, no. 4 (Winter 1963), pp. 392-415; a l s o , P a u l , "The Wheat Trade Between C a l i f o r n i a and the United Kingdom", op_. c i t . , p. 407. 179 54 during a previous era". On the other hand, Falkner, B e l l and Company, an o l d and e s t a b l i s h e d American f i r m , " i l l u s t r a t e s an a l t e r n a t i v e way by which B r i t i s h businessmen could place orders f o r g r a i n and could o b t a i n s u p e r v i s i o n f o r t h e i r r e l a t e d a f f a i r s , i f they d i d not wish to set up an American a f f i l i a t e " . 5 5 Besides handling g r a i n f o r S c o t t i s h and E n g l i s h companies, i t acted as the r e p r e s e n t a t i v e f o r s e v e r a l B r i t i s h insurance companies, i n c l u d i n g Lloyd's of London, and f o r the S c o t t i s h American Investment Company. Fa l k n e r , B e l l and Company, l i k e B a l f o u r , Guthrie and Company, d i r e c t e d B r i t i s h c a p i t a l i n t o a number of business a c t i v i t i e s . ( i i i ) V i c t o r i a and B r i t i s h M e r c a n t i l e Houses Many of the e s t a b l i s h e d San Fra n c i s c o f i r m s that came to V i c t o r i a a f t e r 1858 were part of t h i s London-Liverpool-Glasglow m e t r o p o l i t a n network. The l o c a l r e p r e s e n t a t i v e s of these f i r m s were sometimes Americans, but as J.M.S. Careless pointed out: ...often i n s t e a d they were V i c t o r i a n s of B r i t i s h background, se r v i n g as l o c a l partners i n t h e i r f i r m which i t s e l f might reach back f a r beyond San Fran-c i s c o i n a chain of i n t e r l o c k i n g p a r t n e r s h i p s to New York, L i v e r p o o l and London. Dickson, De Wolf, f o r example ( l o c a l l y Dickson and Campbell), was based on H. N. Dickson's of London, and a l s o had h o u s e ^ o r c o r -respondents i n L i v e r p o o l , Boston and H a l i f a x . Furthermore, while there were a considerable number of n o n - B r i t i s h merchants and commission agents operating i n V i c t o r i a , the l a r g e - s c a l e import/export 54 R o t h s t e i n , "A B r i t i s h Firm on the West Coast", op. c i t . , pp. 392-93. 55 P a u l , "The Wheat Trade", op. c i t . , pp. 407-08. 5 ° C a r e l e s s , "The Business Community i n the E a r l y Development of V i c t o r i a " , ap_. c i t . , p. 109. 180 operations tended to be dominated by B r i t i s h merchant c a p i t a l i s t s . 5 7 J . J . Southgate, a B r i t i s h commission agent and shipper, f o r example, moved to 58 V i c t o r i a from San Francisco i n 1858, and the Lowe Brothers, two prominent B r i t i s h merchants w i t h Hudson's Bay Company connections, t r a n s f e r r e d t h e i r m e r c a n t i l e operations to V i c t o r i a i n 1861-62. Other important B r i t i s h mer-chant c a p i t a l i s t s w i t h d i r e c t t i e s to England included J . Robertson Steward, Robert Burnaby, Captain Stamp and G. M. Sproat. J . Robertson Steward was inv o l v e d i n l a r g e - s c a l e wholesale warehousing, and besides operating an insurance business f o r B r i t i s h and American companies, he acted as the agent of the B r i t i s h Columbia Investment and Loan Soc i e t y . 59 Robert Burnaby, a f t e r forming a p a r t n e r s h i p w i t h an E n g l i s h c a p i t a l i s t , came to V i c t o r i a from London i n 1858 to manage Henderson, Burnaby and Company. Burnaby was l a t e r i nvolved i n the A n t l e r Bedrock Flume Company, the Queen C h a r l o t t e Mining Company, and the B r i t i s h Columbia and V i c t o r i a N a vigation Company; and from 1860 to 1865, he was a member of the House of Assembly f o r 60 the Esquimalt D i s t r i c t . Captain Stamp was an E n g l i s h shipping master and 5 7 I b i d . , pp. 110-11. 58 see, J . M. S. C a r e l e s s , "The Lowe Brothers, 1852-70: A Study i n Business R e l a t i o n s on the North P a c i f i c Coast", B.C. Studies, no. 2 (summer 1969), pp. 1-18. 59 see, Dorothy Blakey Smith (ed.), "The Jo u r n a l of Arthur Thomas Bushley, 1858-1859", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , v o l . XXI (1957/58), B i o g r a p h i c a l Appendix, pp. 164-65. 60 see, I b i d . , p. 194; W. Kaye Lamb, " E a r l y Lumbering on Vancouver Is-land, Part I I : 1855-1866", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . I I , no. 2 ( A p r i l 1938), pp. 97-105; F. W. Howay, " E a r l y Shipping i n Burrard I n -l e t , 1863-1870", B r i t i s h Columbia H i s t o r i c a l Q u a r t e r l y , V o l . I (1937), pp. 8-12. 181 commission agent who was engaged i n c o n t r a c t i n g spars and lumber on Puget Sound i n 1858. He owned a considerable amount of land at Vancouver I s l a n d , V i c t o r i a and Langley, and a f t e r r e t u r n i n g from England i n 1860, he i n i t i a t e d the c o n s t r u c t i o n of a l a r g e steam-powered sawmill on Vancouver I s l a n d f o r Anderson and Company, a b i g London f i r m of shipowners and shipbrokers. Stamp l a t e r appeared on Burrard I n l e t , where he b u i l t a sawmill f o r a group of Eng-61 62 l i s h c a p i t a l i s t s . And f i n a l l y G. M. Sproat was sent to Vancouver I s l a n d by Anderson and Company, and a f t e r Captain Stamp resigned i n 1862, he took over as the l o c a l manager of the f i r m . Sproat a l s o e s t a b l i s h e d an importing, commission and insurance business, and a f t e r r e t u r n i n g to England i n 1865, he set up the "London Committee f o r Watching the A f f a i r s of B r i t i s h Columbia". I t appears, -then, to be q u i t e evident that V i c t o r i a was not, i n econo-mic terms, a c o l o n i a l appendage to San F r a n c i s c o . The economy of B r i t i s h Columbia was dominated by a m e t r o p o l i t a n network that went f a r beyond the c i t y of San F r a n c i s c o . As K e i t h R a l s t o n f i r s t pointed out: a " t r i a n g l e of trade" e x i s t e d f o r both San F r a n c i s c o and V i c t o r i a ; a t r i a n g l e of trade that " i n -volved d i r e c t and independent l i n k s w i t h Great B r i t a i n , as w e l l as c r o s s -6 3 connections w i t h each other". San F r a n c i s c o ' s i n f l u e n c e as we w i l l see, 61 "Stamp's s a w m i l l " was owned by the B r i t i s h Columbia and Vancouver I s l a n d Spar, Lumber, and Sawmill Company; the company was incorporated i n England w i t h a c a p i t a l of 100,000 pounds. 62 see, T. A. Richards, " G i l b e r t Malcolm Sproat", B r i t i s h Columbia  H i s t o r i c a l Q u a r t e r l y , V o l . I (1937), pp. 21-32. 63 K e i t h R a l s t o n , "Patterns of Trade and Investment on the P a c i f i c Coast, 1867-1892: The Case of the B r i t i s h Columbia Salmon Canning Industry", B.C. Studies, no. 1 (Winter 1968/69), p. 45. 182 o f f s e t not only by B r i t i s h c o n t r o l of s t a t e power, but a l s o , by the f a c t that the dominant f r a c t i o n of the c a p i t a l i s t c l a s s i n B r i t i s h Columbia was f i r m l y l i n k e d to B r i t i s h c a p i t a l ; they were engaged i n i m p e r i a l trade and were bound p o l i t i c a l l y and i d e o l o g i c a l l y to B r i t i s h c a p i t a l . (D) B r i t i s h M e r c a n t i l e E l i t e and Confederation The economic s t r u c t u r e of c o l o n i a l B r i t i s h Columbia was that of com-m e r c i a l c a p i t a l i s m . The b i g merchant-traders, who were predominately B r i -t i s h , were engaged i n l a r g e - s c a l e import/export operations, and they main-ta i n e d a c l o s e and subordinate r e l a t i o n s h i p to the B r i t i s h m e t r o p o l i s . They accumulated wealth i n commerce and i n those e n t e r p r i s e s which promised quick returns from r e a d i l y e x p l o i t a b l e resources. The b i g B r i t i s h merchant-traders were the dominant or hegemonic f r a c t i o n of the c a p i t a l i s t c l a s s and they were c l o s e l y a l l i e d w i t h the high-ranking o f f i c i a l s and bureaucrats of the c o l o n -i a l government; together they formed a power a l l i a n c e , guaranteeing t h e i r s p e c i f i c i n t e r e s t s , and the i n t e r e s t s of E n g l i s h f i n a n c i a l c a p i t a l , by the e x e r c i s e of s t a t e power. The s o l i d a r i t y of i n t e r e s t s between the b i g mer-chant-traders and the top personnel of the executive was created by both t h e i r common s o c i a l background, and by the p a r t i c i p a t i o n of key government o f f i c i a l s i n commerce and land s p e c u l a t i o n . The executive held the dominant p o s i t i o n throughout the c o l o n i a l per-i o d and i t r e f l e c t e d the place from which the hegemonic f r a c t i o n e x e r c i s e d s t a t e power. This can be seen from a b r i e f examination of the forms of the State between 1849 and 1871. Vancouver I s l a n d was administered by a Governor without a C o u n c i l from 1850 to 1851. In 1851 a C o u n c i l was added, but i t was not r e p r e s e n t a t i v e . From 1856 to the union of the Colony of Vancouver I s l a n d and the Colony of B r i t i s h Columbia i n 1866, an Assembly was i n e x i s t e n c e , but n e i t h e r the Governor ror the C o u n c i l were r e p r e s e n t a t i v e or r e s p o n s i b l e through the Assembly. The Colony of B r i t i s h Columbia i n f a c t never had an Assembly; 183 from 1858 to 1864 i t was r u l e d by the Governor without a C o u n c i l , and i n 1864 a C o u n c i l was added, c o n s i s t i n g of f i f t e e n members, f i v e of whom were e l e c t e d . With the union i n 1866 of the two Colonies the C o u n c i l was i n -creased to twenty-four members, but s t i l l only nine members were e l e c t e d . Governor Musgrave increased the r e p r e s e n t a t i v e nature of the C o u n c i l some-what i n 1870, but i t d i d not s u b s t a n t i a l l y a l t e r the f a c t that C o l o n i a l B r i -t i s h Columbia was without r e s p o n s i b l e government u n t i l a f t e r 1871 and Con-64 f e d e r a t i o n . The Crown refused to concede r e s p o n s i b l e government to colo n -i a l B r i t i s h Columbia d e s p i t e the f a c t that the M i d - V i c t o r i a n age was suppos-edly the high water mark of the " P h i l o s o p h i c a l R a d i c a l s " and " L i t t l e England-ism" . The c o l o n i a l o f f i c i a l s and bureaucrats of B r i t i s h Columbia were a l -most a l l of A n g l o - I r i s h origin.°5 Many of the key government o f f i c i a l s had been as s o c i a t e d w i t h the Hudson's Bay Company i n the p a s t , D D and the c l o s e l i n k s between the Hudson's Bay Company, the s t a t e , and the dominant B r i t i s h merchants were a c h a r a c t e r i s t i c f e a t u r e of the p e r i o d . The success of the commission and wholesale business of the Lowe Brothers, f o r example, was l a r g e l y a r e s u l t of t h e i r c l o s e connection w i t h the Hudson's Bay Company. ...the Lowes' t i e s w i t h the older t r a d i n g system on the north west coast, that of the Hudson's Bay Company, were p l a i n l y v i t a l f o r a l a r g e part of t h e i r business operations. Thomas (Lowe) by h i s p r i o r career and James (Lowe) by a s s o c i a t i o n had 64 see, John Garner, The Franchise and P o l i t i c s i n B r i t i s h North  America, 1755-1867 (Toronto, U n i v e r s i t y of Toronto Press, 1969), chapter 9. 65 see, M. A. Ormsby, "Some I r i s h figures i n C o l o n i a l Days", B r i t i s h  Columbia H i s t o r i c a l Quarterly, Vol. XIV (1950), pp. 61-82; Howay, Sage & Angus, B r i t i s h Columbia and the United States, p. 182. 66 see, V i c t o r i a , Colonist, February 12, 1859. 184 access to an " o l d boys' net" that had by no means l o s t i t s meaning on the coast w i t h the end of the Oregon f u r trade. The Lowes' business and s o c i a l d e a l i n g s w i t h Douglas, Grahame, and Anderson or w i t h A l l a n , McKinley, B i r n i e , and many other Hudson's Bay f i g u r e s , as agents, p a r t n e r s , or customers a l l make that point e s s e n t i a l l y c l e a r . The t i e s , moreover, went s t i l l f u r t h e r . A l l a n and McKinley were P e r t h s h i r e men; Grahame and Anderson were Thomas Lowe's b r o t h e r s -in-law, having a l s o married daughters of James B i r n i e ; and there were other complex i n t e r c o n n e c t i o n s of o r i g i n and marriage throughout the whole Oregon-Vancouver I s -land Company community.^ 7 The B r i t i s h m e r c a n t i l e e l i t e and the members of the executive, along w i t h the high-ranking o f f i c e r s of the Royal Navy and the Royal Engineers, formed a r u l i n g c l a s s i n the Colony. They d i s p l a y e d a r i s t o c r a t i c values and were the defenders of the m e r c a n t i l e order, opposing republicanism and the 68 i n t r o d u c t i o n of democratic i n s t i t u t i o n s . The middle c l a s s was made up of the small t r a d e r s and i n t e r m e d i a r i e s who d i d not take part i n the great im-p e r i a l trade, and of the c l a s s of p r o f e s s i o n a l s who were excluded from power by the B r i t i s h governing c l i q u e . This c l a s s attempted to defend the i n t e r e s t s of the small t r a d e r and farmer, opposed the mismanagement of p u b l i c funds, and protested the domination by the t r a d i t i o n a l e l i t e s and the r e s t r a i n t s imposed by the m e r c h a n t - f i n a n c i a l a r i s t o c r a c y of V i c t o r i a . The f i g h t f o r r e s p o n s i b l e C a r e l e s s , "The Lowe Brothers", op_. c i t . , p. 17-18. 68 see, Harold G r i f f i n , B r i t i s h Columbia: The People's E a r l y Story (Vancouver, Tribune P u b l i s h i n g Company, 1958), chapter V, " F i g h t f o r Respons-i b l e Government", pp. 28-34; W. N. Sage, "From Colony to Province: The I n t r o -d u c t i o n of Responsible Government i n B r i t i s h Columbia", B r i t i s h Columbia  H i s t o r i c a l Q u a r t e r l y , V o l . I l l , no. 1 (January 1939), pp. 1-14. For an example of c l a s s l e g i s l a t i o n w i t h regard to the f r a n c h i s e i . e . , bestowing the f r a n c h i s e on "gentlemen b a i l i f f s " and u n i v e r s i t y graduates of B r i t i s h u n i v e r s i t i e s see, Garner, The Franchise and P o l i t i c s i n B r i t i s h North America, pp. 120-21. 185 government was bound up w i t h the c o n f l i c t between V i c t o r i a and New Westminister and w i t h the question of Confederation, e s p e c i a l l y among the small group of Canadian p r o f e s s i o n a l s , newspapermen and t r a d e r s . The Canadian group, l e d by Amor de Cosmos, John Robson and others, sought the d e s t r u c t i o n of the a r i s t o -c r a t i c s t r u c t u r e of government and the establishment of r e s p o n s i b l e government, a government which they hoped to c o n t r o l . As Governor Musgrave reported: The more prominent A g i t a t o r s f o r Confederation are a small knot of Canadians who hope...to make f u l l e r r e p r e s e n t a t i v e i n s t i t u t i o n s and r e s p o n s i b l e government part of the new arrangements, and that they may so place themselves i n p o s i t i o n s of i n f l u e n c e and emolument. The B r i t i s h m e r c a n t i l e e l i t e of B r i t i s h Columbia, i n a l l i a n c e w i t h E n g l i s h f i n a n c i a l c a p i t a l , worked behind the scenes i n London i n order to safeguard t h e i r c l a s s i n t e r e s t s ; and these i n t e r e s t s were those of B r i t i s h c a p i t a l . G i l b e r t Sproat r e a l i z e d that the u l t i m a t e d e c i s i o n s e f f e c t i n g the f u t u r e of B r i t i s h Columbia were made i n London. As he s a i d : "The C o l o n i a l O f f i c e d i d not care two straws f o r any popular movements here: the b a t t l e was i n London". 7^ On h i s r e t u r n to London i n 1865, Sproat set up the "London Committee f o r Watching the A f f a i r s of B r i t i s h Columbia", which he described as "a f i g h t i n g o r g a n i z a t i o n , and true i t i s , though strange a nucleus of general c o l o n i a l o p i n i o n , i n London, f o r h a l f a dozen y e a r s " . 7 1 L i k e the B r i t i s h North American A s s o c i a t i o n , the "London Committee" brought together and coordinated a number of powerful E n g l i s h c a p i t a l i s t s i n t e r e s t e d i n the a f -f a i r s of B r i t i s h Columbia. I t represented the Hudson's Bay Company, the Bank 69 c i t e d i n Ormsby, B r i t i s h Columbia, p. 242. 7 ^ Richards, " G i l b e r t Malcolm Sproat:, op_. c i t . , p. 23. 7 1 c i t e d i n I b i d . 186 of B r i t i s h Columbia, and the E n g l i s h c a p i t a l i s t s who had invested i n c o l o n i a l bonds, r e s o u r c e - e x t r a c t i o n and land. Members of the "London Committee f o r Watching the A f f a i r s of B r i t i s h Columbia" i n c l u d e d , along w i t h Sproat, Donald F r a s e r , A. G. D a l l a s , and G. H. Richards of the Royal Navy. Donald F r a s e r , who was the P a c i f i c Coast correspondent f o r the London Times, was a l s o a l a r g e land-owner i n V i c t o r i a , and i n 1858 was appointed by Douglas to the Executive C o u n c i l . A. G. D a l l a s succeeded Douglas as head of the Hudson's Bay Company's Western department; he was a l s o Douglas' son-in-law. In 1862 he succeeded George Simpson as Governor of Rupert's Land, and i n 1866 he l e f t the a c t i v e s e r v i c e of the Hudson's Bay Company, but remained a stockholder. D a l l a s kept i n c l o s e contact w i t h the P a c i f i c Coast, and as Ormsby s a i d : "...he was i n t i -mate w i t h London bankers, f i n a n c i e r s and promoters who were seeking opportuni-72 t i e s to i n v e s t c a p i t a l i n r a i l w a y systems . Sproat and the "London Committee" d i d not oppose the union of Vancouver I s l a n d and B r i t i s h Columbia i n 1866, but they d i d oppose the terms f o r union. They e s p e c i a l l y objected to the l o s s of V i c t o r i a ' s f r e e port s t a t u s and the suspension of Vancouver I s l a n d ' s L e g i s l a t i v e Assembly. As Sproat s a i d : Had the f r e e p o r t , according to the conception of the Home government, been conserved, i t would have been the means of c r e a t i n g a l a r g e c i t y a commer-c i a l and money center, r a d i a t i n g energy throughout the whole country, and subsequent province a c i t y , probably, only second to San Fr a n c i s c o on the P a c i f i c seaboard. 73 The "London Committee" and the r u l i n g c l a s s of B r i t i s h Columbia, however, were able to wage a s u c c e s s f u l campaign to have V i c t o r i a made the c a p i t a l of the Ormsby, B r i t i s h Columbia, p. 156. Richards, " G i l b e r t Malcolm Sproat", op. c i t . , p. 23-24. 187 74 Colony, d e s p i t e the o b j e c t i o n s of Governor Seymour and New Westminister.. Throughout the r e s t of the 1860s, Sproat and D a l l a s , along w i t h Dr. Rae, Dr. Cheadle, Captain Richards, Whymper, A l f r e d Waddington, and "others of greater wealth, rank and i n f l u e n c e " , 7 5 continued to lobby i n London on the matter of the "Overland Route" from Canada to the P a c i f i c . Another E n g l i s h c a p i t a l i s t who was i n t e r e s t e d i n the f u t u r e develop-7 6 ment of B r i t i s h Columbia was A l f r e d Robert Roche. Henry Crease, the Attorney-General of B r i t i s h Columbia, was Roche's f r i e n d and correspondent on the P a c i -f i c Coast. Crease, i n order to earn more money, acted as the agent f o r the C o l o n i a l S e c u r i t i e s Company, an E n g l i s h company that d i r e c t e d B r i t i s h . c a p i t a l " i n t o c o l o n i a l bonds, r e a l e s t a t e , mortgages, and loans, and more importantly to developments l i k e g r i s t m i l l s , graving docks, and r a i l w a y s " . 7 7 Roche was 74 A f t e r the L e g i s l a t i v e C o u n c i l voted i n favour of V i c t o r i a f o r the C a p i t a l , Helmcken reported how he was s u r p r i s e d and pleased w i t h the vote, but that the r e s i d e n t s of New Westminister were angry. " A f t e r dinner, Cox, Pemberton, Southgate, Stamp and I were s i t t i n g smoking i n the backroom not a l i t t l e b i t s a t i s f i e d when...the l a n d l o r d came i n a l i t t l e f r i g h t e n e d , saying, you had b e t t e r not go o u t s i d e ! There i s a crowd w a i t i n g f o r you and threaten to be revenged on you but p a r t i c u l a r l y Cox". ( c i t e d i n Ormsby, "Some I r i s h F i g u r e s " , op_. c i t . , p. 75). 7 5 V i c t o r i a , C o l o n i s t , J u l y 20, 1868, c i t e d i n Smith, "The J o u r n a l of Arthur Thomas Bushley", op_. c i t . , p. 174. 7 6 see, Gordon R. E l l i o t t , "Henry P. Pellow Crease: Confederation or No Confederation", B.C. Studies, no. 12 (Winter 1971/72), pp. 63-74. 7 7 I b i d . , p. 66. 188 Secretary of the Company and the Royal C o l o n i a l Society i n London, and he t r i e d to i n f l u e n c e the C o l o n i a l Secretary to leave the c a p i t a l i n New West-m i n i s t e r . Crease, who had invested h e a v i l y i n the area, a l s o favoured New Westminister. Roche, i n t e r e s t e d i n investment o p p o r t u n i t i e s and r a i l w a y s , however, continued to pressure f o r the maintenance of the I m p e r i a l connection. A. R. Roche, a heavy i n v e s t o r i n a number of enter-p r i s e s i n B r i t i s h Columbia, had long been an advocate of North American Union. As he watched from London the "grasping p r o p e n s i t i e s " of the United States, he urged h i s f r i e n d s i n the Colony to s u s t a i n a demand f o r the c o n s t r u c t i o n of a naval dry-dock at Esquimalt and a r a i l w a y to span B r i t i s h North America, two pro-j e c t s necessary to r e i n f o r c e the bond w i t h the United Kingdom. At h i s i n v i t a t i o n , eight c o l o n i s t s , i n c l u d i n g S i r James Douglas, became members of the Royal C o l o n i a l I n s t i t u t e i n 1869. Subscribing to the e f f o r t s of the I n s t i t u t e to o f f s e t the current vogue of a n t i - c o l o n i a l i s m i n England, t h i s l i t t l e group, most of them government o f f i c i a l s , worked to maintain enthusiasm f o r an I m p e r i a l connection which would be f i r m though of n e c e s s i t y e l a s t i c . 7 9 Roche was an Anglo-Canadian e x p a n s i o n i s t . In 1855, he urged that Canadian troops help take Alaska so that Canada could have a v o i c e i n i t s d i s -80 p o s i t i o n a f t e r the Crimean War, and, s i n c e the e a r l y 1850s, he was i n v o l v e d i n the promotion of t r a n s c o n t i n e n t a l r a i l w a y schemes. Roche was associated w i t h A l l a n MacDonell, the Toronto c a p i t a l i s t , who had t r i e d to s t a r t a "new North-west Company". In 1851 MacDonell f a i l e d to get a charter f o r the i n c o r p o r a t i o n of the Lake Superior and P a c i f i c Railway, but i n 1858 he was able to o b t a i n a c h a r t e r f o r the Northwest T r a n s p o r t a t i o n , Navigation and Railway Company, which 78 "Roche appears to have been so q u i e t l y powerful i n London that he not only c o n t r o l l e d the purse s t r i n g s of the Company, but could, on occasion, s c a t -t e r h i s f r i e n d s and business a s s o c i a t e s across the empire" ( i b i d ) . 79 Ormsby, B r i t i s h Columbia, p. 236. 80 see, Morton, The C r i t i c a l Years, p. 26; a l s o A. R. Roche, A View of Russian American i n Connection w i t h the Present War (Montreal, 1855). 189 was "impowered to construct l i n k s of r a i l w a y between navigable lakes and r i v e r s , so as to provide f a c i l i t i e s f o r transport from the shores of Lake Superior to 81 Fraser's R i v e r " . MacDonell f a i l e d to get f i n a n c i a l backing; Roche, however, continued to advocate Confederation and a P a c i f i c Railway. The C o l o n i a l Se-c u r i t i e s Company was i n t e r e s t e d i n f i n a n c i n g an overland wagon road from B r i -t i s h Columbia to connect w i t h a Canadian l i n e at Red R i v e r . Crease wrote to Douglas i n March, 1867, r e p o r t i n g that the f i n a n c i a l arrangements had been made f o r the road and that the c h i e f delegates to the Confederation Confer-• „ . . 82 ence xn Canada were i n t e r e s t e d . The members of the me r c a n t i l e e l i t e were not unanimous i n favouring B r i t i s h Columbia's entry i n t o the Canadian f e d e r a t i o n ; some of them r e p r e -sented the doubts and m i s t r u s t i n the V i c t o r i a m e r c a n t i l e community of union 83 w i t h f a r - o f f Canada, and t h i s was understandable c o n s i d e r i n g the amount of trade that flowed between San Fra n c i s c o and V i c t o r i a . In general terms, how-ever, the B r i t i s h m e r c a n t i l e e l i t e a c t i v e l y sought, i n V i c t o r i a and London, the development of a t r a n s c o n t i n e n t a l t r a d i n g system w i t h i n the context of B r i t i s h i m p e r i a l i s m . Many of the high-ranking o f f i c i a l s of the c o l o n i a l bureaucracy a l s o i n i t i a l l y opposed Confederation, not because they were a n t i -B r i t i s h or favoured annexation w i t h the United S t a t e s , but because of t h e i r m a t e r i a l concern over t h e i r p o s i t i o n i n any f u t u r e Dominion. As Sage s a i d : "The r e a l crux of the p o l i t i c a l s i t u a t i o n was the a t t i t u d e of the o f f i c i a l s . They knew that union w i t h Canada would probably mean that they would be thrown 81 T r o t t e r , Canadian Federation, p. 258. 82 E l l i o t t , "Henry P. Pellow Crease", op_. c i t . , p. 66. 8 3 Ca r e l e s s , "The Lowe Brothers", op_. c i t . , p. 15. 190 84 out of employment". Governor Musgrave, who succeeded Seymour a f t e r h i s death, was i n s t r u c t e d by the C o l o n i a l O f f i c e to b r i n g B r i t i s h Columbia i n t o the Canadian Federation, and he was able to overcome the o p p o s i t i o n of the o f f i c i a l s by o f f e r i n g p o s i t i o n s under the Dominion Government, promising pensions to the executive c o u n c i l l o r s , and when vacancies were a v a i l a b l e , 85 t r a n s f e r s to posts i n other c o l o n i e s . In terms of the f u t u r e development of B r i t i s h Columbia, annexation 86 w i t h the United States was never a r e a l a l t e r n a t i v e to Confederation. The annexation movement was centered amongst the small merchants and tr a d e r s of V i c t o r i a , most of whom were n o n - B r i t i s h . As W. E. I r e l a n d s a i d : "Economic 87 d i s s a t i s f a c t i o n was the b a s i s of the movement". The main source of support f o r the movement i n the United States came from C a l i f o r n i a . San Fra n c i s c o wanted the c o a l f i e l d s of Vancouver I s l a n d and i t wanted to prevent the con-s t r u c t i o n of a t r a n s c o n t i n e n t a l r a i l w a y to B r i t i s h Columbia; a r a i l w a y that 84 W. N. Sage, "The C r i t i c a l P e r i o d of B r i t i s h Columbia H i s t o r y , 1866-1871", P a c i f i c H i s t o r i c a l Review, V o l . I (1932), p. 440. 8 5 I b i d . 86 see, W. N. Sage, "The Ann e x a t i o n i s t Movement i n B r i t i s h Columbia", Transactions of the Royal Society of Canada, 3rd S e r i e s , V o l . XXI, sec. i i (1927), pp. 97-110; Hugh Keenleyside, " B r i t i s h Columbia Annexation or Con-f e d e r a t i o n " , Canadian H i s t o r i c a l A s s o c i a t i o n Report, 1928, pp. 34-40; W i l l i a m E. I r e l a n d , "The Annexation P e t i t i o n of 1869", B r i t i s h Columbia  H i s t o r i c a l Q u a r t e r l y , V o l . IV (1940), pp. 267-87; Donald F. Warner, The Idea  of C o n t i n e n t a l Union, A g i t a t i o n f o r the Annexation of Canada to the United  States, 1849-1893 ( U n i v e r s i t y of Kentucky Press, 1960), pp. 127-41. 87 I r e l a n d , "The Annexation P e t i t i o n " , op_. c i t . , p. 269. 191 would enable V i c t o r i a , 1,500 m i l e s c l o s e r to the Orient than San F r a n c i s c o , to o u t s t r i p San F r a n c i s c o f o r the A s i a t i c trade. But d e s p i t e the American pur-chase of Alaska i n 1867 and the e x p a n s i o n i s t statements of W i l l i a m Seward, 88 the Secretary of State f o r the United S t a t e s , the many r e s o l u t i o n s and pet-i t i o n s urging the annexation of the P a c i f i c Northwest never received much sup-port i n Washington. W i t h i n the Colony the movement was confined to the small n o n - B r i t i s h shopkeepers and merchants of V i c t o r i a , and there was no evidence of support on the mainland. Both the Canadian c o n f e d e r a t i o n a l i s t s and the B r i t i s h m e r c a n t i l e e l i t e r e a l i z e d that an American northern t r a n s c o n t i n e n t a l r a i l w a y would have S e a t t l e as i t s terminus. And i t was only the B r i t i s h im-p e r i a l s t r a t e g y of B r i t i s h North American c o n s o l i d a t i o n and expansion that o f f e r e d V i c t o r i a the chance of becoming the terminus of i t s own t r a n s c o n t i n -e n t a l r a i l w a y . As the B r i t i s h C o l o n i s t wrote on August 30, 1864: With t e l e g r a p h i c and r a i l w a y communication from the one ocean to the other, and w i t h a f e d e r a l union that w i l l c o l l e c t and concentrate the c o l o n i a l i n -t e l l e c t r e p r e s e n t i n g the v a r i o u s c o l o n i a l i n t e r e s t s , what country can have a greater f u t u r e before i t than t h i s g i g a n t i c confederacy w i t h i t s i l l u m i t a b l e and d i v e r s i f i e d resources. (E) B r i t i s h Merchant Banks and Confederation B r i t a i n ' s i n d u s t r i a l economy r e l i e d f o r i t s expansion on i n t e r n a t i o n a l trade. Overseas markets f o r i t s manufactured products and overseas o u t l e t s f o r i t s surplus c a p i t a l were an i n t e g r a l and growing part of her economy i n 89 the nineteenth century. The hegemonic f r a c t i o n of the c a p i t a l i s t c l a s s i n England was involved i n i n t e r n a t i o n a l merchant c a p i t a l i s m . They derived pro-88 see, Charles V e v i e r , "American Continentalism", i n J . Rogers Hol l i n g s w o r t h (ed.), American Expansion i n the Late Nineteenth Century, (New York: H o l t , Rinehart & Winston, 1968), pp. 22-23. see, E. J . Hobshawn, Industry and Empire, The Making of Modern  E n g l i s h S o c i e t y , V o l . I I , 1750 to the Present Day (New York, Pantheon Books, 1968), chapter 7, pp. 110-27. 192 f i t s from f o r e i g n trade, and s e r v i c e s such as insurance and brokerage commis-s i o n s , from s h i p p i n g , and from the i n t e r e s t and dividends on f o r e i g n loans. I n d u s t r i a l c a p i t a l remained dependent upon merchant c a p i t a l f o r the develop-ment and expansion of markets, and t h i s p a r t i a l l y e x p l a i n s the e x t e r n a l 90 o r i e n t a t i o n of the B r i t i s h economy. The c a p i t a l i s t s who were engaged i n 91 i n t e r n a t i o n a l f inance and trade dominated both the B r i t i s h economy and s t a t e . The merchant bankers of London were e s p e c i a l l y powerful; Baring Brothers and Glyn, M i l l s and Company, f o r example, were d i r e c t l y represented w i t h i n government c i r c l e s . Alexander Baring was a member of the B r i t i s h P a r l -iament and the b r o t h e r - i n - l a w of P. C. Labouchere, a C o l o n i a l Secretary. The Baring f a m i l y , f o r p u b l i c s e r v i c e , at home and abroad, " c o l l e c t e d no fewer than 92 eight peerages, the f i r s t i n 1835, the l a t e s t i n 1961". Fol l o w i n g c l o s e on one another i n the 1830s, they produced a President of the Board of Trade and a Chancellor of the Exchequer, i n the 1870s a Viceroy of I n d i a , i n the quarter-century to 1908 the "pro-c o n s u l " of Egypt (the f i r s t Lord Cramer), i n the two decades to 1960 a key f i g u r e i n diplomacy on the A f r i c a n continent ( S i r Evelyn Ba r i n g , now Lord Howick) and i n 1961 a Governor of the Bank (the t h i r d E a r l of Cramer).^3 The Glyns were e q u a l l y as i n f l u e n t i a l w i t h i n the government. George Carr Glyn was a Member of Parliament f o r Kendal s i n c e 1847, from 1866 onwards he was see, Fred Block, "Expanding C a p i t a l i s m : The B r i t i s h and American Cases", Berkeley J o u r n a l of Sociology, V o l . XV (1970), pp. 139-40. 91 see, M. B. Brown, A f t e r Imperialism (London, 1963), p. 106; Block, "Expanding C a p i t a l i s m " , op_. c i t . , p. 140. Richard K e l l e t t , The Merchant Banking Arena (New York, St. Martin's Press, 1967), p. 101. 9 3 I b i d . , p. 102. 193 Gladstone's c h i e f whip, and i n 1867 he was made a peer on the recommendation 94 of Gladstone. As F u l f o r d s a i d : For Whip or L i b e r a l Cabinet M i n i s t e r s Glyn d i d • : much v a l u a b l e work behind the scenes. Gladstone and A l t h o r p at the Exchequer, Charendon i n I r e l a n d and Dalhousie i n I n d i a were a l l glad to a v a i l them-selves of the advice and guidance.95 In short, the men who r u l e d B r i t a i n i n the nineteenth century were i n v o l v e d i n i n t e r n a t i o n a l merchant c a p i t a l i s m . London was the center of i n t e r n a t i o n a l trad-ing and f i n a n c i a l t r a n s a c t i o n s , and i t was from t h i s center that B r i t i s h im-p e r i a l p o l i c y emanated. The merchant and i m p e r i a l bankers of London formed a c l o s e - k n i t , i n -terconnected group of powerful c a p i t a l i s t s ; as A. S. J . Baster concluded: . . . r i g h t from the e a r l i e s t times, these banks formed i n London a compact and homogeneous group, connected amongst themselves or w i t h E n g l i s h Domestic banks, by a comprehensive system of i n -t e r l o c k i n g d i r e c t o r a t e s without t a k i n g account of m e r c a n t i l e connections and m e r c a n t i l e o r i g i n s . They d i r e c t e d B r i t i s h c a p i t a l to Canada, I n d i a and other f o r e i g n and c o l o n i a l governments, and i n so doing, they ushered i n what Jenks has c a l l e d a "period 97 of e n t e r p r i s e administered abroad from London". For Canada and I n d i a the i m p o r t a t i o n of B r i t i s h c a p i t a l at that time ( a f t e r 1850) i m p l i e d a per-s i s t e n t measure of business c o n t r o l from London. And i t gave r i s e to memorable episodes i n which a r t s of p o l i t i c a l manipulation gave a i d to the c r a f t of enterprise.98 9 4 F u l f o r d , Glyns, p. 132,133,179. 9 5 I b i d . , p. 132. 96 A. S. J . Baster, The I m p e r i a l Banks (London, P. S. King and Son, 1929), p. 120. 97 Jenks, The M i g r a t i o n of B r i t i s h C a p i t a l , p. 195. 98 I b i d . , p. 198. 194 The Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia were part of t h i s group, and i n conjunction w i t h the m e r c a n t i l e i n t e r e s t s of London, Montreal and V i c t o r i a , were instrum e n t a l i n the development of a st r o n g , cen-t r a l i z e d s t a t e s t r u c t u r e i n B r i t i s h North America a strong s t a t e s t r u c t u r e that would ensure the s e c u r i t y and f u t u r e p r o f i t a b i l i t y of t h e i r investments. The l a r g e merchant banks, such as Baring's and Glyn's, and the "Em-p i r e " banks, such as the Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia were complementary i n many res p e c t s . Merchant banks, however, d i f -fered from chartered commercial banks i n that they d i d not d e a l w i t h i n d i v i d -u a l c i t i z e n s ; they d e a l t w i t h e s t a b l i s h e d businesses and governments, i n c l u d -ing the p r o v i s i o n of c r e d i t f o r commercial banks. In other words, merchant banks were not banks of deposit and i s s u e i n the present-day sense. The Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia nevertheless per-formed an analogous^role i n the economy of B r i t i s h Columbia to that of Baring's and Glyn's i n Canada. They financed overseas trade, issued loans to the c o l -o n i a l government o f t e n buying the loan themselves, and i f they could r e s e l l the debentures, at a l a r g e p r o f i t margin and most important, t h e i r i n f l u e n c e i n London was great. Both the Bank of B r i t i s h North America and the Bank of B r i t i s h Columbia were d i r e c t e d from London, and t h e i r concern f o r t h e i r cus-tomers' c r e d i t standing i n the Colony was an elementary aspect of t h e i r o p erations. The c r e a t i o n of the Bank of B r i t i s h North America c o i n c i d e d w i t h the f i r s t s i z e a b l e i n f u s i o n of B r i t i s h c a p i t a l i n t o Canada. The bank was e s t a -99 b l i s h e d i n 1736 by a group of E n g l i s h c a p i t a l i s t s . The second meeting of the London Committee was attended by Robert G i l l e s p i e of G i l l e s p i e and Company, the E n g l i s h branch of G i l l e s p i e , M o f f a t t and Company of Montreal; James Dowie, of see, Denison, H i s t o r y of the Bank of Montreal, V o l . I , pp. 313-21; Baster, The I m p e r i a l Banks, pp. 78-86. 195 Gould, Dowie and Company of Quebec, H a l i f a x and New York; and by a represent-a t i v e of the P r o v i n c i a l Bank of I r e l a n d and other B r i t i s h m e r c a n t i l e houses. A r e s o l u t i o n was passed at t h i s meeting i n v i t i n g the p a r t i c i p a t i o n of Baring Brothers; R o t h s c h i l d ; Ried, I r v i n g and Company; Edward E l l i c e ; Kinnar and Company; R. N. Hunt of Newman, Hunt and Company of St. Johns, Newfoundland; and others. George Forsyth and R u s s e l l E l l i c e , two prominent Canadian mer-chant-traders attended the next meeting. There were t h i r t e e n d i r e c t o r s l i s t e d , i n c l u d i n g O l i v e r F a r r e r (also of the P r o v i n c i a l Bank of I r e l a n d , Bank of A u s t r a l a s i s , Ionian Bank, and the "Mediterranean Bank"), S i r Andrew P e l l e t Greene (also of the "Mediterranean Bank" and the Ionian Bank), S i r Robert Campbell and W i l l i a m Medley (both a l s o of the P r o v i n c i a l Bank of I r e l a n d ) , and Alexander G i l l e s p i e , J r . (also of the B r i t i s h American Land Company, and l a t e r , the B r i t i s h North American A s s o c i a t i o n ) . The company's banker was Glyn, M i l l s and Company. By the end of 1837, the Bank of B r i t i s h North America had branches i n Montreal, Quebec, H a l i f a x , Toronto, St. John, New Brunswick, and St. John's, Newfoundland, and a paid-up c a p i t a l of 340,000 pounds, which was l a r g e r than that of any other bank i n Canada. In 1859 a branch was e s t a b l i s h e d at V i c -t o r i a and w i t h i n a few years, the bank had branches on the mainland and i n C a l i f o r n i a . The London d i r e c t o r s and shareholders of the Bank of B r i t i s h North America had powerful connections i n London, and t h e i r i n f l u e n c e can be seen i n the e v o l u t i o n of the Canadian banking system, on banking l e g i s l a t i o n , 1 ^ and on the economic and p o l i t i c a l development of Canada. As Bray Hammond s a i d : The establishment of the Bank of B r i t i s h North America, i n the l i g h t of what happened l a t e r , was of considerable s i g n i f i c a n c e . I t was an e a r l y and major movement of B r i t i s h c a p i t a l i n t o the Provinces. see, Denison, H i s t o r y of the Bank of Montreal, pp. 320-21. 196 I t presaged greater f u t u r e investments, and i n a sense i t a n t i c i p a t e d f e d e r a t i o n , t a k i n g economic u n i t y f o r granted and s e t t i n g up i n f a c t as w e l l as i n name a branch of B r i t i s h North America, i n -t e r p r o v l n c i a l or n a t i o n a l , as other banks so f a r were not. I t was an impressive step by Great B r i t a i n as I m p e r i a l p a r t i c i p a n t i n the i n t e r n a l development of Canada and dominant e x t e r n a l i n f l u e n c e upon her i n s t i t u t i o n s . I t ind i c a t e d . . . a n awakened s p i r i t i n the mother country. The Bank of B r i t i s h Columbia was founded i n London i n 1862 by a group 102 of E n g l i s h bankers and merchants. The new bank was o r i g i n a l l y to be c a l l e d the Bank of B r i t i s h Columbia and Vancouver I s l a n d , but the awkwardness of the name, and " p o s s i b l y a h i n t from the C o l o n i a l O f f i c e of probable union of the 103 two c o l o n i e s " , r e s u l t e d i n the name being changed to the Bank of B r i t i s h Columbia. The gold d i s c o v e r i e s on the Fr a s e r , the abundance of c a p i t a l seek-ing investment i n London, and the success of recent banking ventures i n Eng-land and abroad encouraged the establishment of the bank. The bank had a nom-i n a l c a p i t a l stock of 250,000 pounds, and by 1865, i t had s i x branches, i n -c l u d i n g one i n Po r t l a n d and San Fr a n c i s c o . The American branches i n f a c t o f -ten exceeded those of B r i t i s h Columbia i n magnitude and p r o f i t . The Bank of B r i t i s h Columbia, l i k e the Bank of B r i t i s h North America, had w e l l e s t a b l i s h e d connections i n London. The d i r e c t o r s of the banking com-pany included: Thomas W i l l i a m Lockwood Mackean (chairman), who was a l s o a mem-ber of Turner and Company of China, a d i r e c t o r of the London and South A f r i c a n Bank, and he had an i n t e r e s t i n the V i c t o r i a f i r m of Stewart, Meldrum and Com-pany; Robert G i l l e s p i e , J r . (deputy chairman and f u t u r e chairman), who was a Bray Hammond, "Banking i n Canada Before Confederation, 1792-1867", i n W. T. Easterbrook & M. H. Watkins (eds.), Approaches to Canadian Economic  H i s t o r y (Toronto, McClelland & Stewart, 1967), p. 162-63. 102 see, Ross, A H i s t o r y of the Canadian I m p e r i a l Bank of Commerce, pp. 251-350; Baster, The Im p e r i a l Banks, pp. 86-88. 103 Ross, A H i s t o r y of the Canadian I m p e r i a l Bank of Commerce, p. 259. 197 member of G i l l e s p i e , Moffat and Company, London and Montreal, a l a r g e Canadian m e r c e n t i l e house in v o l v e d i n r a i l w a y s and land i n the east; Eden C o l v i l e , who was a l s o a d i r e c t o r of the Hudson's Bay Company, the C o l o n i a l Bank and the West Indian Dock Company; Alexander Mackenzie, who was a l s o a d i r e c t o r of the O r i e n t a l Bank; Henry McChlery, who was a member of the p r i v a t e banking f i r m of Cavan, Lubbock and Company, and l a t e r , a d i r e c t o r of the N a t i o n a l P r o v i n c i a l Bank; M a r t i n R i d l e y Smith s who was a member of the p r i v a t e banking house of Smith, Payne and Smiths, which was the agent f o r the Bank of Montreal i n London between 1837 and 1842; James Anderson, who was a member of Anderson and Com-pany, the London f i r m of shipowners and shipbrokers who financed a l a r g e saw-m i l l on A l b e r n i Canal on Vancouver I s l a n d ; and Duncan James Kay, Lewis Fraser and James Bonar, who were a l l members of long-standing and s u b s t a n t i a l London Houses. As w e l l as having powerful connections i n London, the Bank of B r i t i s h Columbia a l s o had a strong connections w i t h the A t l a n t i c Coast and Canada. The H a l i f a x Banking Company and the Merchants Bank of P r i n c e Edward I s l a n d acted as the bank's agent on the A t l a n t i c . S i r Samuel Cunard, who was one of the o r i g i n a l partners i n the H a l i f a x Banking Company, was one of the o r i g i n a l sub-s c r i b e r s i n the Bank of B r i t i s h Columbia. G i l l e s p i e , Moffat and Company was the agent i n Montreal, and Fa l k n e r , B e l l and Company was appointed the agent i n San F r a n c i s c o u n t i l the bank opened i t s own branch there i n 1864. G i l l e s p i e , who was a l s o a d i r e c t o r of the Bank of B r i t i s h North America, d e s i r e d to strengthen the connection between B r i t i s h Columbia, Canada and Eng-land, and he exerted considerable i n f l u e n c e i n t h i s d i r e c t i o n . In 1863, G i l l e s -p i e , Moffat and Company "advised the Bank of B r i t i s h Columbia that so f a r there had been l i t t l e i n t e r c o u r s e between the two c o l o n i e s , but that i f the proj e c t e d telegraph and other communication through the Red Ri v e r country should be c a r r i e d 104 out, the connection might become more i n t i m a t e " . And i n 1862 the D i r e c t o r s I b i d . , p. 297. 198 had "asked the V i c t o r i a manager to gi v e a t t e n t i o n to the d e s i r a b i l i t y of e s t a -b l i s h i n g a uniform standard of value f o r the pound s t e r l i n g throughout B r i t i s h North America. They look forward to extensive i n t e r c o u r s e between Canada and the P a c i f i c Coast c o l o n i e s at no d i s t a n t day, deem i t a d v i s a b l e that the method of quoting exchange should be the same as i n Canada, and ask the manager to use h i s i n f l u e n c e to t h i s end"."^ 5 As Ross concluded: " . . . i t i s evident that the i n f l u e n c e of the Bank of B r i t i s h Columbia was s t r o n g l y d i r e c t e d toward the strengthening of the t i e s w i t h Great B r i t a i n and Canada". ^ D (F) Summary and Conclusion The economic s t r u c t u r e of the Colony of B r i t i s h Columbia was that of commercial or merchant c a p i t a l i s m ; a c a p i t a l i s m based on the e x p l o i t a t i o n and movement of a s t a p l e product, gold. Merchant c a p i t a l , which was w e l l adapted to gathering up and exchanging surface products, dominated the economy of the Colony. The t o t a l value of gold production was n e a r l y a l l s u r p l u s , and i t was appropriated by merchants, bankers and shipping f i r m s , and by i n t e r m e d i a r i e s of a l l k i n d s . Gold miners were the i d e a l object of m e r c a n t i l e e x p l o i t a t i o n . V i c t o r i a was the dominant commercial center of the region ; i t was the r e g i o n a l m e t r o p o l i s . V i c t o r i a organized i t s h i n t e r l a n d around i t s e l f by pro-v i d i n g the necessary market t r a n s p o r t a t i o n system and f i n a n c i a l f a c i l i t i e s . The c a p i t a l i s t s of V i c t o r i a were able to ensure the commercial supremacy of t h e i r c i t y by enacting r e g u l a t i o n s and l e g i s l a t i o n , such as the " l i c e n c i n g sys-tem" f o r miners and the Southern Boundary Ac t , by e s t a b l i s h i n g V i c t o r i a as a fr e e p o r t , and by b u i l d i n g a t r a n s p o r t a t i o n system that would ensure that trade was drawn along the Fraser R i v e r - V i c t o r i a route. The c o n f l i c t between V i c t o r i a and New Westminister a c o n f l i c t that was a constant f e a t u r e of the p o l i t i c a l I b i d . , p. 298. I b i d . 199 scene throughout the c o l o n i a l p e r i o d can be i n t e r p r e t e d and explained i n terms of a m e t r o p o l i s - h i n t e r l a n d p e r s p e c t i v e . New Westminister a s p i r e d to m e t r o p o l i t a n dominance but was checked by the entrenched power and i n f l u e n c e of V i c t o r i a . The f i n a n c i a l s t r u c t u r e that grew up i n B r i t i s h Columbia was geared to f a c i l i t a t i n g the e x p l o i t a t i o n and movement of s t a p l e products over long d i s -tances. The f i n a n c i a l s t r u c t u r e emerged to complement the commercial system. P r i v a t e c a p i t a l , i f i t was invested and not hoarded or exported, was i n v e s t e d i n e x t r a c t i v e or m e r c a n t i l e operations. A f t e r 1858 and the increase i n the de-mand f o r resources, f o r e i g n c a p i t a l flowed i n t o the r e g i o n . There was some domestic c a p i t a l accumulation. Sewell P r e s c o t t Moody, Moses I r e l a n d and James Van Bramer, f o r example, b u i l t a sawmill on Burrard I n l e t from the p r o f i t s they had made i n gold mining on the Fraser R i v e r . 1 0 7 But d e s p i t e the f a c t that l a r g e q u a n t i t i e s of gold were mined i n B r i t i s h Columbia, l i t t l e of i t was r e i n v e s t e d i n the r e g i o n , and by f a r the g r e a t e s t p o r t i o n was exported. In f a c t , through-out the 1860s and beyond, B r i t i s h Columbia experienced a l a c k of c a p i t a l f o r both p r i v a t e and p u b l i c ventures. The f o r e i g n c a p i t a l that d i d enter the reg-i o n was predominately E n g l i s h f i n a n c i a l c a p i t a l , and i t tended to flow i n t o the export and import trades and not i n t o domestic o p p o r t u n i t i e s . P u b l i c c a p i t a l , on the other hand, was, l i k e p r i v a t e c a p i t a l , m o b i l i z e d on the formal c a p i t a l markets of London, but u s u a l l y by the Banks. P u b l i c c a p i t a l was used i n the c o n s t r u c t i o n of roads and harbour f a c i l i t i e s the commercial i n f r a s t r u c t u r e and, l i k e the c o n s t r u c t i o n of canals and r a i l w a y s i n the c o l o n i e s of Eastern Canada, absorbed an enormous share of p u b l i c c a p i t a l and c o n t r i b u t e d g r e a t l y to the l a r g e p u b l i c debt that accrued during the pre-confederation p e r i o d . J . C. Lawrence, Markets and C a p i t a l : A H i s t o r y of the Lumber Trade i n B r i t i s h Columbia (M. A. Thesis, U n i v e r s i t y of B r i t i s h Columbia, 1857), p. 16. 200 The increase i n the p u b l i c debt and the f i n a n c i a l weakness of the two col o n i e s forced t h e i r union i n 1866. Behind the scheme f o r r e g i o n a l union stood the Bank of B r i t i s h Columbia and the Bank of B r i t i s h North America; both of these banks were s e r i o u s l y concerned about the p u b l i c finances of the c o l o -n i e s , and along w i t h other E n g l i s h c a p i t a l i s t s who had invested h e a v i l y i n c o l o n i a l bonds, pressured the C o l o n i a l O f f i c e to achieve t h i s end. Regional c o n s o l i d a t i o n was expected to strenthen the Colony's c r e d i t standing i n London. The Hudson's Bay Company and the E n g l i s h c a p i t a l i s t s who had invested i n c o l o n -i a l c o a l , timber and land a l s o favoured union. The p a r a l l e l s between the s i t u a t i o n i n B r i t i s h Columbia and the developments i n Canada i n the 1860s are s t r i k i n g . V i c t o r i a , w h i l e being the dominant metropolis of the r e g i o n , was at the same time dominated by, and connected t o , the l a r g e r m e t r o p o l i t a n centers of San F r a n c i s c o 'and London. The f u r trade had t i e d the P a c i f i c Northwest d i r e c t -l y to Montreal f o r a short p e r i o d of time, but a f t e r the amalgamation of the Northwest Company and the Hudson's Bay Company i n 1821, d i r e c t maritime l i n k s to London were e s t a b l i s h e d . The discov e r y of gold on the Fraser R i v e r i n 1857, however, transformed the p a t t e r n of trade i n the re g i o n . San Fra n c i s c o became the major market f o r B r i t i s h Columbia, as w e l l as the most important source of supply. V i c t o r i a , however, was not simply a c o l o n i a l appendage to San Fran-c i s c o . The me t r o p o l i t a n i n f l u e n c e of San F r a n c i s c o , to repeat what J . M. S. Careless s a i d , was o f f s e t by a B r i t i s h i n f l u e n c e i n p o l i t i c s , c a p i t a l i n v e s t -ments, business personnel, and by "the very dea l i n g s w i t h f i r m s i n San Fra n c i s c o that were themselves part of a London-Liverpool and Glasgow m e t r o p o l i t a n net-108 work". A t r i a n g l e of trade and c a p i t a l investment e x i s t e d between V i c t o r i a , C a r e l e s s , "The Business Community i n the E a r l y Development of V i c -t o r i a " , op_. c i t . , p. 122. 201 San F r a n c i s c o and London, and through London to Montreal. This m e t r o p o l i t a n network t i e d the Colony of B r i t i s h Columbia to Great B r i t a i n , and u l t i m a t e l y to Canada. In other words, B r i t a i n was a b l e to m a i n t a i n c o n t r o l of B r i t i s h Columbia, and to preserve her s t r a t e g i c i n t e r e s t s i n the r e g i o n , not only be-cause of o u t r i g h t p o l i t i c a l possession, but a l s o because of c a p i t a l i n v e s t -ments and a s i g n i f i c a n t B r i t i s h i n f l u e n c e i n trade, insurance, business per-sonnel and f i n a n c e . The c a p i t a l i s t c l a s s of B r i t i s h Columbia was based on merchant c a p i t a l . The b i g merchants of V i c t o r i a were predominately B r i t i s h and they were engaged i n l a r g e s c a l e import-export operations. They accumulated c a p i t a l i n the commerce of s t a p l e s and i n the p r o v i s i o n i n g trade r a t h e r than out of i n d u s t -r i a l development even on the smallest s c a l e . The business community was i n -t e r e s t e d i n commerce r a t h e r than production. The merchants and the f i n a n c i e r s of V i c t o r i a and the o f f i c i a l s and bureaucrats of the c o l o n i a l government were c l o s e l y a l l i e d ; they formed a power a l l i a n c e and guaranteed t h e i r s p e c i f i c i n -t e r e s t , and the i n t e r e s t of E n g l i s h f i n a n c i a l c a p i t a l , by the e x e r c i s e of s t a t e power. The executive branch of government predominated throughout the c o l o n i a l p e r i o d . The c o n f l i c t between the b i g merchants, landholders and o f f i c i a l s and the s m a l l - s c a l e merchants, farmers and p r o f e s s i o n a l s r e l a t e d to the c o n f l i c t between the executive and the l e g i s l a t u r e . S i m i l a r l y , the c o n f l i c t between V i c t o r i a and New Westminister, as manifested i n the question of f r e e trade and t a r i f f s , the union of the two c o l o n i e s , and the choice f o r the s i t e of the c a p i t a l a f t e r the union of the two c o l o n i e s , can be i n t e r p r e t e d as not only the c o n f l i c t between a m e t r o p o l i s and h i n t e r l a n d , but a l s o a s t r u g g l e f o r s t a t e power between v a r i o u s f r a c t i o n s of the c a p i t a l i s t c l a s s . 202 The dominant f r a c t i o n of the c a p i t a l i s t c l a s s i n the Colony was f i r m l y l i n k e d to B r i t i s h c a p i t a l . The m e r c a n t i l e e l i t e of V i c t o r i a was engaged i n i m p e r i a l trade and they were bound p o l i t i c a l l y and i d e o l o g i c a l l y to B r i t i s h c a p i t a l . The m e r c a n t i l e e l i t e , i n a l l i a n c e w i t h E n g l i s h f i n a n c i a l c a p i t a l , worked behind the scenes i n London to safeguard t h e i r i n t e r e s t s , the i n t e r e s t s of B r i t i s h c a p i t a l . L i k e the merchants and f i n a n c i e r s of Montreal, the mer-c a n t i l e e l i t e of V i c t o r i a a g i t a t e d f o r an overland route from Canada to the P a c i f i c . The long d i s t a n c e and i m p e r i a l trade drawn across B r i t i s h North America was the major reason behind the d r i v e to construct a t r a n s c o n t i n e n t a l r a i l w a y . The merchants and f i n a n c i e r s of V i c t o r i a would p r o f i t as the i n t e r -mediaries of t h i s trade, but only i f V i c t o r i a was the P a c i f i c terminus of a r a i l w a y scheme. F i n a l l y , B r i t i s h merchant banks a l s o played a very i n f l u e n t i a l r o l e i n strengthening the t i e s between B r i t i s h Columbia, Great B r i t a i n and Canada. The Bank of B r i t i s h Columbia and the Bank of B r i t i s h North America were the two dominant f i n a n c i a l i n s t i t u t i o n s i n the Colony; both of these banks were con-t r o l l e d from London. They were connected amongst themselves and w i t h other E n g l i s h and Canadian banks and m e r c a n t i l e houses by an i n t r i c a t e web of i n t e r -l o c k i n g d i r e c t o r s h i p s . These merchant banks formed a c l o s e - k n i t , compact group i n London and they played a dominant r o l e i n the p o l i t i c s of B r i t i s h im-p e r i a l i s m . London was the center of the i n t e r n a t i o n a l t r a d i n g and f i n a n c i a l o perations; i t was the center of B r i t i s h i m p e r i a l p o l i c y , and i t was from t h i s center that pressure f o r Confederation emanated. The Bank of B r i t i s h Columbia and the Bank of B r i t i s h North America played a r o l e i n the road to Confedera-t i o n f o r B r i t i s h Columbia analogous to that played by the b i g merchant banks of Baring's and Glyn's i n Canada. The E n g l i s h c a p i t a l i s t s connected w i t h the 203 b i g merchant banks were engaged i n i n t e r n a t i o n a l trade and f i n a n c e , and they put B r i t i s h c a p i t a l to work i n the i n t e r e s t of binding f o r e i g n and c o l o n i a l markets to the B r i t i s h f a c t o r y and i n developing sources of food-s t u f f s and raw m a t e r i a l s . The socio-economic development of B r i t i s h Colum-b i a was part of t h i s process of B r i t i s h economic i m p e r i a l i s m . B r i t i s h f i n -a n c i a l c a p i t a l , i n a l l i a n c e w i t h the m e r c a n t i l e i n t e r e s t s of London, Mon-t r e a l and V i c t o r i a , stood behind the d r i v e toward Confederation. A s t r o n g , c e n t r a l i z e d s t a t e s t r u c t u r e i n B r i t i s h North America would ensure the secur-i t y and f u t u r e p r o f i t a b i l i t y of t h e i r investments. 204 I I CONCLUSION In the preceding pages, I have attempted to answer a l l of the questions put f o r t h i n the i n t r o d u c t i o n . Since the answers to these questions have been e x p l i c i t l y s t a t e d throughout the t h e s i s , i t seems unecessary to repeat them a l l here. This chapter, t h e r e f o r e , w i l l merely attempt to provide the reader w i t h a b r i e f review of the more general and important conclusions. (1) (a) The h i s t o r i a n s of B r i t i s h Columbia who attempted to e x p l a i n the forces behind the Colony's entry i n t o the Canadian Federation found the co n d i t i o n s of the r i s e , e v o l u t i o n and f u n c t i o n i n g of the s o c i a l formation i n the " i n t e n t i o n a l " a c t i v i t y of i n d i v i d u a l s , i n the environment, or i n technology. This approach, w h i l e p r o v i d i n g u s e f u l i n f o r m a t i o n and i n s i g h t s , f a i l e d to b r i n g to l i g h t the more fundamental s t r u c t u r e s that shape and de-termine e m p i r i c a l r e a l i t y ; i t f a i l e d to b r i n g to l i g h t the u n i n t e n t i o n a l p r o p e r t i e s inherent i n the economic s t r u c t u r e and s o c i a l r e l a t i o n s . (b) The socio-economic development of the P a c i f i c Northwest d i d not take place i n i s o l a t i o n . B r i t i s h Columbia's entry i n t o Confederation occured w i t h i n the t o t a l framework of c a p i t a l i s t expansion i n the nineteen-th century. I t occured w i t h i n the context of B r i t i s h i m p e r i a l i s m . The h i s -t o r i a n s of B r i t i s h Columbia have f a i l e d to adequately examine and e x p l a i n the nature and character of B r i t i s h i m p e r i a l i s m i n the re g i o n . (c) The forces behind B r i t i s h Columbia's entry i n t o Confederation can only be explained by examining the h i s t o r i c a l and s t r u c t u r a l circum-stances surrounding the r e l a t i v e stages of economic,development i n the metropole and the h i n t e r l a n d . The s t r u c t u r a l r e l a t i o n s h i p between the Colony 205 and the B r i t i s h metropolis changed as the economic s t r u c t u r e of England changed. (2) At a fundamental, s t r u c t u r a l l e v e l , the road to Confederation f o r B r i t i s h Columbia—as f o r Canada—was e s s e n t i a l l y determined by a s h i f t i n the economic s t r u c t u r e of England from merchant c a p i t a l i s m to indus-t r i a l c a p i t a l i s m . This s h i f t r e s u l t e d i n the t r a n s f o r m a t i o n of the nature and character of B r i t i s h i m p e r i a l i s m ; (3) In t h i s t h e s i s , i m p e r i a l i s m was defined as a s u f f i c i e n t p o l i t i c a l f u n c t i o n of the process of i n t e g r a t i n g new regions i n t o expanding economies. The " m e r c a n t i l i s t use of power to o b t a i n commercial supremacy and monopoly through p o l i t i c a l possession" or the " i m p e r i a l i s m of f r e e t r a d e " which i s content to " l i m i t the use of paramount power to e s t a b l i s h i n g the s e c u r i t y of t r a d e " are v a r i a b l e p o l i t i c a l f u n c t i o n s of an expanding i n d u s t r i a l i z e d 1 economy. (4) (a) Great B r i t a i n was c o n s i s t e n t i n attempting to i n t e g r a t e the P a c i f i c Northwest i n t o i t s own expanding economy. An examination of B r i t -i s h p o l i c y i n the region d i s p e l s the " c l a s s i c a l view" that argued that the middle decades of the nineteenth century was a p e r i o d of a n t i - i m p e r i a l i s m and i n d i f f e r e n c e toward empire. B r i t a i n demonstrated an e s s e n t i a l c o n t i n u i t y i n i t s i m p e r i a l p o l i c y throughout the p e r i o d . The i d e o l o g i c a l conceptions a s s o c i a t e d w i t h i n d u s t r i a l c a p i t a l masked t h i s c o n t i n u i t y . (b) B r i t a i n was able to e s t a b l i s h and maintain paramountcy i n B r i t i s h Columbia by using both the i n f o r m a l and formal methods of c o n t r o l and expansion. Underlying the d i v e r s e forms and methods, however, was the 1 Gallagher & Robinson, "The Imperialism of Free Trade", ap_. c i t . , p. 6. 206 b a s i c p r i n c i p l e of extending c o n t r o l . (c) The instruments of B r i t i s h i m p e r i a l i s m and the character of economic development i n the h i n t e r l a n d region of the P a c i f i c Northwest changed as the economic s t r u c t u r e of the metropole changed. The Hudson's Bay Company r e f l e c t e d an e a r l i e r e r a , the era of merchant c a p i t a l i s m , and the b i g B r i t i s h merchant and empire banks r e f l e c t e d the era of i n d u s t r i a l c a p i t -a l i s m . (5) (a) The Hudson's Bay Company, protected by the Royal Navy, a c t -ed as the instrument of B r i t i s h t e r r i t o r i a l c o n t r o l and expansion i n the per i o d before 1858. The Hudson's Bay Company maintained the commercial and s t r a t e g i c i n t e r e s t s of the empire and i n t e g r a t e d the region i n t o B r i t a i n ' s own expanding economy by means of the m e r c a n t i l i s t technique of monopoly. The great f u r t r a d i n g monopoly opened the door to f u t u r e trade and investment without the B r i t i s h government r e s o r t i n g to formal annexation or o u t r i g h t p o l i t i c a l possession. (b) The Hudson's Bay Company was a "throw-back" to the era of merchant c a p i t a l i s m , the era of me r c a n t i l i s m . During the p e r i o d of C o l o n i a l -Company-Rule (1849-1858) the Company obstructed and delayed settlement, and f i x e d the r e l a t i o n s of production i n an a r c h a i c mold of extra-economic c o e r c i o n . (c) The Hudson's Bay Company was an anomoly i n the age of i n -d u s t r i a l c a p i t a l i s m and i t came under a t t a c k by the merchants and i n d u s t r i -a l i s t s who were the bearers of the new s o c i a l r e l a t i o n s of production and of the new conception of empire. The monopoly p o s i t i o n of the Company f i n a l l y came to an end because of the pressure exerted i n London by B r i t i s h and Canadian c a p i t a l i s t s ; c a p i t a l i s t s who c l e a r l y saw that the i n t e r e s t s of 207 monopoly could not be r e c o n c i l e d w i t h commercial and a g r i c u l t u r a l develop-ment . (6) (a) The pe r i o d between 1858 and 1871 was the p e r i o d of d i r e c t c o l o n i a l r u l e i n B r i t i s h Columbia. The Colony was d i r e c t l y administered by the Crown. P o l i t i c a l possession, however, d i d not simply represent an extension of m e r c a n t i l i s m . The c o n t r o l of s t a t e power was only one f a c t o r r e s p o n s i b l e f o r maintaining B r i t i s h a u t h o r i t y i n the re g i o n ; B r i t a i n was als o able to e x e r c i s e c o n t r o l through the techniques of c a p i t a l and commer-c i a l p e r e t r a t i o n . (b) B r i t i s h Columbia was part of a t r i a n g l e of trade and i n v e s t -ment; a t r i a n g l e that i n c l u d e d V i c t o r i a , San Francisco and London. London was the center of the me t r o p o l i t a n network. Outright p o l i t i c a l possession, important though i t was i n mai n t a i n i n g the B r i t i s h i m p e r i a l connection, was only a v a r i a b l e p o l i t i c a l f u n c t i o n of an expanding i n d u s t r i a l i z e d B r i t i s h economy. (c) The pe r i o d of d i r e c t c o l o n i a l r u l e was a l s o a p e r i o d i n which the b i g B r i t i s h merchant banks played a dominant r o l e i n the p o l i t i c s of B r i t i s h i m p e r i a l i s m . They d i r e c t e d c a p i t a l abroad and ushered i n a "per-2 i o d of e n t e r p r i s e administered from London". The new s t r a t e g y i n v o l v e d converting underdeveloped regions i n t o complementary h i n t e r l a n d economies; s a t e l l i t e regions that would provide raw m a t e r i a l s and food f o r Great B r i -t a i n , w h i l e at the same time p r o v i d i n g markets f o r her manufactures and surplus c a p i t a l . Both B r i t i s h Columbia and Canada were connected "to Lon-2 Jenks, The M i g r a t i o n of B r i t i s h C a p i t a l , p. 115. 208 dori, the center of B r i t i s h i m p e r i a l p o l i c y , and i t was from t h i s center that pressure f o r Confederation emanated. (7) (a) The entry of B r i t i s h Columbia i n t o Confederation had i t s roots i n the d r i v e by E n g l i s h f i n a n c i a l c a p i t a l , i n a l l i a n c e w i t h the mer-chant and f i n a n c i a l i n t e r e s t s of Montreal, to create a u n i f i e d commercial system w i t h i n the context of B r i t i s h i m p e r i a l i s m . The development of a t r a n s c o n t i n e n t a l t r a d i n g system would make B r i t i s h North America a great "half-way" house by c h a n n e l l i n g trade and commerce between the Far East and Europe. The r u l i n g c l a s s of B r i t i s h Columbia was f i r m l y l i n k e d to B r i t i s h c a p i t a l , and they a c t i v e l y sought, i n London, Montreal and V i c t o r i a , the achievement of Confederation. B r i t i s h Columbia was, as A l f r e d Waddington s a i d , the "key to the North P a c i f i c " . (b) The i m p e r i a l s t r a t e g y i n v o l v e d the c o n s o l i d a t i o n and expan-s i o n of B r i t i s h North America w i t h i n a s t r o n g , c e n t r a l i z e d s t a t e s t r u c t u r e \ the a c q u i s i t i o n and development of a western h i n t e r l a n d was an i n t e g r a l part of t h i s s t r a t e g y . I t was through a program of r a i l w a y expansion that Eng-i s h f i n a n c i a l c a p i t a l sought to save i t s investments i n Canada. (c) Confederation would provide the necessary p o l i t i c a l s t a b i l -i t y and economic s e c u r i t y f o r a fundamental p r o j e c t of economic growth. 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