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Secondary IV • 2yr.


What was the colonial economy like between 1840 and 1896?

Thank you !


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Explanations (1)

  • Explanation from Alloprof

    Explanation from Alloprof

    This Explanation was submitted by a member of the Alloprof team.

    Team Alloprof • 2yr.

    Hello TomateSupra7536,

    Thank you for your question :)!

    Before the Act of Union (Protectionism) :

    First, colonial trade mainly began in the early part of the 19th century due to Napoleon's continental blockade because it forced the United Kingdom to source timber from its colony in Lower Canada. The metropolis then practiced protectionism by offering preferential rates, such as lower import taxes on materials and products from the colonies than those from other European countries. The metropolis therefore protected the economy of its colonies against competition from other countries by increasing customs prices on products from other countries. Therefore, British buyers favored the purchase of materials and products from the colonies, since they generally cost less due to the lower rates. The timber trade thus encouraged, timber became the main export product of Lower Canada while wheat became the main export product of Upper Canada.

    Economy of United Canada after the Act of Union of 1840 (Economic Liberalism) : The United Kingdom abandoned protectionism and adopted the school of thought called economic liberalism and its economic system called free trade. According to this new school of thought and principal thinker, Adam Smith, the state should intervene the least possible in the economy and trade, believing that the market would regulate itself for the benefit of the greatest number. Economic liberalism is therefore opposed to protectionism. Therefore, free trade abolished customs rates, considering them as a brake on trade. United Canada found itself in direct competition with other countries also wishing to trade with this rich power that is the United Kingdom. The British Empire then no longer supported the economy of its colonies.

    Forestry industry after 1840 :

    However, the timber trade continued to develop during the 1840s, particularly in Saguenay, Outaouais and Mauricie, since United Kingdom’s merchants remained the main investors in this field in United Canada. The forestry industry was very labor-intensive, providing jobs for farmers in the winter, when they couldn’t work in the fields due to the weather. In Quebec, forest resources were used to build ships, mainly exported to the United Kingdom for the commercial and military fleets. During the 1840s, the port of Quebec became one of the largest ports in the world!

    Reciprocity Treaty with the United States (1854) :

    Following the adoption of free trade by the metropolis, United Canada faced competition from other countries and saw its exports in various fields reduced. United Canada had to find new markets to sell its materials, resources and products and, therefore, turned itself to its southern neighbor, the United States. In 1854, the United Canada and the United States signed the Reciprocity Treaty, making it possible to increase trade between them. The Treaty stipulated that the United States would not impose customs taxes on raw materials or agricultural products from United Canada. Ensuring a low price of Canadian products to American buyers, wheat, lumber and charcoal were heavily exported to the United States. The Treaty ended in 1866 when the United States refused to renew it. United Canada, once again, had to find new solutions to continue its economic development. However, during this 12 years period, the Reciprocity Treaty enabled the development of United Canada by stimulating technical progress and industrialization as well as developing a vast transport network (canals and railways) for trade with southern neighbors.

    If you have any other questions, don't hesitate to write to us again! :)

    - Noémie

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