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Mining companies in the West Kootenay and Boundary regions of British Columbia, 1890-1900 : capital formation and financial operations Church, John Spencer

Abstract

Foreign ownership and control of major segments of the Canadian economy today, according to many prominent Canadians, present grave problems and offer grim forebodings as to the future ability of Canada to maintain its economic and political independence. In the press, on the political platform, in Parliament, in a Royal Commission Report, and in learned societies, the controversial debate rages with the participants constantly diagnosing the economy's present state of health and busily suggesting a host of remedies. Pre-occupation with the question of foreign ownership and control of the economy is not a twentieth century phenomenon alone. The mining industry of the West Kootenay and Boundary regions of British Columbia in the 1890's—which constituted a significant segment of the economy—was once believed to be almost entirely American owned and controlled, Judge Howay and Dr. Sage, historians, who studied the mining industry in British Columbia, concluded that it was only after 1897 or 1898 that American ownership and control were replaced as "British and Canadian capital began to come into the Kootenays in fairly large quantities." Professor Hansen declared that American activity was strongly in evidence in the mining industry after 1896. Professor Innis stated that the development of lode mining in the Kootenay was the result of the construction of a transcontinental railway which had been primarily designed to handle Pacific Coast traffic. In expanding and focussing the thesis of Professor Innis on the national scene, Professor Creighton insisted that the central objective of national policy after 1867 involved realizing a strong, varied and integrated transcontinental economy. The statements of these authorities have stimulated the present study. New and additional information now has been made available to help to measure the relative control of capital— coastal British Columbian, or interior British Columbian, or other Canadian, or British, or American—in the mining companies of the West Kootenay and Boundary regions, 1890 to 1900. Records pertaining to 1,306 mining companies which were organized and operating in the West Kootenay and Boundary areas at some time between 1890 and 1900 have been examined. Five hundred ten of these companies were either foreign registered or were extra-provincially registered or licensed companies. Information concerning them could only be obtained by examining the British Columbia Gazette and current mining journals. Usually the source of capital has been assumed to be identical with the area of incorporation and with the locale of the head office. Considerably more information is now available on the 762 incorporated companies in British Columbia. Annual returns containing names, and addresses of shareholders and directors and the value of stock held by them provided the means to determine the source of capital for most of these companies. The writer classified these names under the various sources or nationalities. He then determined the total value of stock held by each of these sources for the 762 locally incorporated companies. The source or nationality controlling the company could thus be frequently ascertained. To obtain this information, the writer examined the files of 2,174 companies whose records are preserved on microfilm. The source of capital of a company—if it could be determined—has been noted for the year in which the company was incorporated or registered. This practice has appeared to be satisfactory as examination of annual reports has shown a remarkable absence of transfer of capital control from one group to another. The study is then confined to an examination and comparison of the source of capital of mining companies as determined by the year of incorporation or registration. The thesis is an inductive one. In addition to the above assumptions, lack of sufficient and reliable evidence on the source of capital of 214 companies has caused these companies to be classed under the category of insufficient information. The financial operations and the reasons for the success of a few companies and the reasons for the failure of many companies are examined. Changes in the control and ownership of many of the more important corporations are noted. Important capitalists, promoters and political figures who played a prominent role in financing companies are noted. The basic patterns and trends in capital formation, 1890 to 1900, and in a more general fashion, the trends from 1901 to 1914 are traced. In the period before 1890, the few companies established after the completion of the transcontinental line of the Canadian Pacific Railway in 1885 are briefly described. In the 1890 to 1900 period, American owned companies declined relatively as Canadian and British owned companies increased, but there were always significant numbers of American companies. The Canadian companies played an active role as one of the main agents in stemming the pervasive American influences in the region. After 1898, as Canadian capital controlled a second east-west railway in the South Kootenay and Boundary country, and as Canadians owned the major smelter, the Canadian and British owned mining corporations assisted in integrating the regions into the new Canadian transcontinental economy. Within the eleven year period, 1890 to 1900, three subsidiary movements of capital flow occurred. The first two, from 1890 to 1894—chiefly to the Slocan,—and from 1895 to 1897— chiefly to Rossland—followed the basic pattern of the major movement with an initial heavier emphasis on American capital, and a later swing to Canadian and British capital. The last movement, from 1898 to 1900, followed a different course as there was no large early influx of American capital. It only became more prominent at the end of the movement. Consolidations of mining corporations paralleling consolidations in the other major industries of the Province characterized the period from 1901 to 1914. The Canadian owned Consolidated Mining and Smelting Company, a gargantuan concern by 1914, and even then almost synonymous with mining in the Kootenay, had expanded rapidly after its beginning in 1905. Its growth epitomized the era of consolidation before World War I.

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