Presentation on theme: "Class 3: Canada Expands: Agriculture and Manufacturing"— Presentation transcript:
1 Class 3: Canada Expands: Agriculture and Manufacturing
2 Class 3:Canada Expands Agenda Class Admin Summary from Class 2 Trade - ProtectionismNational PolicyBreakAgriculture in Canadian EconomyManufacturing in the Canadian EconomyMassey Harris CaseGroup AssignmentQ & A
3 Class 3:Canada Expands Outcomes Expected Able to discuss the Importance of Trade to CanadaAble to discuss what protectionism is and it’s role in the development of Canada’s EconomyAble to discuss John A. Macdonald’s “National Policy” and the role it plays and still plays in the Canadian economyAble to discuss the role of agriculture and manufacturing to the Canadian economy3
5 Early Governments in Canada Government of New FranceMostly based on feudal systemFur TradersAristocracy, Church dominatedBritish GovernmentTraders and farmers dominatedEarly attempt to eliminate French influence through restrictionsEased off prior to US Revolutionary war
6 Revolutionary War,After U.S. Revolutionary War 50,000 Empire Loyalists who did not want independence from Britain fled persecution and came north to Quebec and Nova Scotia. This resulted in Nova Scotia being split and Britain creating the Province of New Brunswick in 1784 and the creation of Upper and Lower Canada 179169 May 20116
9 Upper & Lower CanadaWhile the British ruled through a Lieutenant Governor, who spent most of their time in Europe, and an elected assemble, the effect rule was left to an executive group who were appointed for life.Family Compact – Upper CanadaChateau Clique - Lower CanadaLead to Unrest and finally rebellions in Upper and Lower Canada in
10 Durham Report 1838After the two Rebellions Britain sends Lord Durham to investigate and to make recommendationsCreate a responsible governmentUnite Upper and Lower Canada 1841 Act of Union into the Province of Canada
11 Lead Up to Confederation Civil War and Raiders from US caused concernPolitical instability in the new province of CanadaJohn A. Macdonald and other delegates created the 72 resolutions that lead to the British America Act in 1867 establishing a confederation of provinces but with a strong central government to avoid US problems
13 What is Federalism?Emphasizes the legal and institutional aspects of the system.It has been defined as the method of dividing powers so that the general or central regional governments are each within there sphere coordinate and independent.13
14 Principles of Federalism Governmental power is distributed between a central or national authority and regional state or provincial authoritiesEvery individual is subject to the laws of each, both the central government and the regional governmentNeither levels can subordinate or over rule the other where powers specifiedWhere powers not explicitly granted they are assumed to be part of either the central or the regional authorityThere is sharing – The sharing does not have to be equal and usually is notBoth authorities have the ability to make laws and enforce them. They also have areas of exclusivity for make lawThe powers of either the central or regional governments cannot be changed or removed by the other unless consented to or under very special circumstances14
15 Federal Legislative Powers British North Amercia Act 1867 Sec. 91VI. -- DISTRIBUTION OF LEGISLATIVE POWERS.91. It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make laws for the Peace, Order, and good Government of Canada.15
16 What are the challenges to Canadian Federalism? Duality of federalism. The country versus the regions.Vast geographic distances.Changing economic and social circumstancesNature of Regions. Many areas of Canada were independent prior to Confederation and have their own distinct identities.Given Canada’s unique flavour of Federalism how is it defined.Constitution Act
17 A Federal System is a Balance While it does not always remain so in the whole the balance seems to workFederalProvincialFederal Government provides peace and security for the entire nationProvincial Governments retain sufficient powers to regulate local matters
18 Judicial PowersA method of authoritative interpretation of the constitutional division of the legislative powerThe testing of the constitutional validity of laws both at the Federal and Provincial LevelsThe sole and absolute arbitratorDivision of powerQuebec SovereigntyOwnership of Mineral Rights off coast – 1965 – CanadaAlberta, Ontario and GSTValidity of LawsSame Sex legisltationMedicinal Marijuana
19 Differences between US and Canada In CanadaPeaceful transition to independenceMore CollectivistMore Gov. involvementMore sense of Gov. responsibility for social welfareAll powers not specifically reserved for the provinces are allotted to the Federal government.House of Commons democratically representativeSenate AppointedCo-operative Federalism – Marble CakeIn the United StatesRevolution to independenceMore IndividualistLess Gov. involvementLess Gov. responsibility for social welfareAll powers not specifically reserved for the Federal government are allotted to the States.House of Representatives (Congress) democratically representativeSenate Elected and EqualDual Federalism – Layer CakeIn Canada the federal and provincial powers overlap and there is a lot of incursion into the provincial domain.The US the separation is more rigid and the Federal Gov. has less leeway to blend its powers with that of the states.
20 3. The fiscal and institutional arrangements of federal-provincial relations Trade was viewed a key benefit of confederation.
21 The Great Canadian Dream Canada's confederation on July 1, 1867 brought four eastern provinces together to form a new country. As part of the deal, Nova Scotia and New Brunswick were promised a railway to link them with the two Central Canadian provinces – Quebec and Ontario.Manitoba joined confederation in British Columbia, on the west coast, was enticed to join the new confederation in 1871, but only with the promise that a transcontinental railway be built within 10 years to physically link east and west. Canadian Pacific Railway was formed in 1881.This great Canadian Dream though national in scope was really the first step towards providing resources to different regions of Canada.Subsidized grain shipments for praririe farmers and the Canadian Wheat Board are all such economic programs that have been focused on various regions of Canada.
22 Fiscal and Institutional Arrangements From Provinces gained more an more power from the Federal governmentMany provinces gained control over crown landsGain control over mineral rightsGrowth of importance of Provincial roles in Education, Health and WelfareThis role for the Federal Government has always existed and was part of the design of Canadian Federalism.The Central government was made stronger than that of the US because the founding fathers did not want strong regional governementsThe Federal governemtn could sieze all power, create a unitary state in time of economic or social unrestRegional government funding was purposely limited to Direct Tax only.The very nature of the regions put restrictions on them NewfoundlandAfter the building of the railroad the next big catalyst that allowed the Feds to get heavily involved in provincial areas was
23 Factors Contributing to Increased Federal Activism The Great Depression and the need for Federal Government help?Federalism was influenced by the economic theories of John Maynard Keynes.Federal authority was seen under Keynes’ economic model to be the provider of economic stability through the use of the Central Bank to regulate money supply anStart of WWII, the War Measures ActPost War recessionThe Great DepressionThe Maritime and the Prairies were the hardest hit. Provincial governments were close to bankruptcy.Federal government developed and extended the concept of :areas of mutual concern”Keynesian economics was put into place where the governments sought to stimulate the economyResult
24 Cooperative Federalism Provinces started to resent Federal involvement in provincial jurisdictionFederal and Provincial Governments agree to work together in areas that are clearly the domain of one or the otherFour Main FeaturesReliance on Federal-Provincial conferencesFederal Government agreed to consult with provinces before committing to programsPolicies designed as fiscal programs to create economic stability and growth – Cost sharingFormal structures to support intergovernmental relationsLead to a more integrated Federalism but did not solve provinces’ concerns24
25 Executive FederalismQuebec often opted out of Federal Programs though wanted the money to do their own. (Double Image Federalism)Provinces began to take more activist roles in economic and social policy and demand great control over revenue and spendingLead to a more Executive FederalismFirst Minister ConferencesHeld behind closed doorsAs double image Federalism grew and other provinces demanded more autonomy over revenue and spending Executive Federalism begin to developHigh level politcal meetings started to take place between first ministers to hammer out policy issues
27 Regional Differences Influenced by immigration patterns. Economics Access to CapitalOccupational MobilityMarket SizeCultural differencesSpatial Mobility i.e. First NationsResource differencesHistoric differencesThere is a great difference by region in almost every aspect.What should the expectations be of the Fed. Government to deal with all these levels of diversityWe speak a lot about the Distinct Society of Quebec but within every region of Canada there are unique societies. – Multicultural SocietyHistorically one of the major sources of conflictDifferent groups have settled in different regions have different demands and needs.Economic diversity has also been with us for years. The have and have not provinces. This prolonged state of a regions economy have also help form regional cultures.Resources – Have resulted in boom bust – Alberta Northern Ontario,BC and Ontario Lumber –Historic – Many provinces were individual colonial states have there own identity. Newfoundland join confederation in 1949 is actually closer to London England than Ottawa
28 Feds try to Manage Regional Differences three ways. Industrial Incentive ProgramsInfrastructure Assistance ProgramsSocial adjustment and rural development programs.There were 3 broad policy areas that the Fed. Gov. has sought to manage Economic and Social Issues that they saw leading to regional and economic disparityWhy do you think they care?Politics – Particlualy in Ontario and Quebec
29 Flaws of Regional Development Industrial incentive programs favor capital-intensive programs in areas where one of the major problems is excess labor. (Mega-projects).Do the companies really need the grants, or would they have done it anyway?Grants to one company could hurt other existing companies who have not received grants.Could lead to bidding wars between provincesBenefit may accrue to multi-national corporations
30 Currency Reform and Bank Act 1871 Canadian Banks: A better systemBy Theresa Tedesco and John Turley-Ewart, Financial PostApril 5, 2009
31 Based on the Stern Model Building an New Country Canada 1867 what do you need for Competition and Sustainable GrowthDiscuss the moGovernment Stability— Sound laws, peace, order and good governmentFinancial System for providing Capital for financing for developmentCurrency and means for trade
32 Class 3: Canada Expands: Agriculture and Manufacturing 32
33 The Role of Government in the Early Development of Canada Sir John A. MacDonald's national policy.Exercise of residual legislative powers to establish a strong central government to unite, expand, develop and settle a newly established nation.Regulate trade and commerce.Establish trading patterns.
34 The Staple Thesis of Harold Innis In 1922, standing on the campus of the University of Toronto, Harold Innis asked the question, What have been the very long run factors in the economic integration and independence of Canada? …He asked it when the Maritime Rights Movement, the Progressives on the Prairies, and the Partie National in Quebec were threatening to destabilize and regionalize the federation. His answer, pointing to the factors of unity and of separation from the United States, constituted the Staple Thesis of Canadian economic development. The Staple Thesis has formed the principal interpretive element in virtually all treatments of Canadian economic history since then.This was needed to hold Canada together and to keep it independent from the US.Notice the similarity of the circumstances then and now politically
35 The Staple Thesis of Harold Innis Asserted the origins and purposes of the federal government can be understood in terms of an economic territory dependent upon the export of certain staples.To make it commercially feasible, production entailed heavy public expenditures on railways and canals.The government filled an important vacuum by being the substitute for private enterprise in the building and developing Canada.Thomas Hockin later argued that the Canadian government was given an active role in national development and fostering and protecting of certain cultural and economic characteristics.Government needed to protect exportation particularly of natural resourcesGovernment needed to build transportation infrastructureState needed to invest before a business case was seenOur culture needed to be protected
36 Section 3: The Evolution of Protectionist Intervention in Canada
43 SIR JOHN A. MACDONALD’S NATIONAL POLICY (1879) Designed to encourage east-west trade rather than north-south with the U.S.Development of harbours and fast steamship lines to England and AsiaEncourage the grow the a wealthy business class in CanadaStrong Immigration Policy to promote the population of Western CanadaMacdonald believed the future of Confederation, he thought, hinged upon the development of the West. Without such development, the Americans would take over the West, encircle Canada and inevitably bring about its annexation. Hence, the dream of creating a sepearate, peaceful and orderly society on the northern half of the continent would die.43
49 Before the National Policy The Canadian American Reciprocity Treaty, also known as the Elgin-Marcy Treaty, was a trade treaty between the colonies of British North America and the United States. It covered raw materials and was in effect from 1854 to It represented a move toward free trade, and was opposed by protectionist elements in the United States, who joined with Americans angry at apparent British support for the Confederate States of America during the American Civil War, ended it in 1866.
50 Post National Policy Attempts at Free Trade The last major attempt at reciprocity was negotiated in 1911 by the Liberal government of Sir Wilfrid LAURIER. This Reciprocity Agreement, to be implemented by concurrent legislation, provided for free trade in natural products and the reduction of duties on a variety of other products. The agreement was accepted by the US Congress but repudiated by Canadians, who ousted the Liberals in the general election of 21 Sept 1911.Protectionism ruled until The Free Trade Agreement of 1989 was signed.
53 What is ProtectionismGovernment actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition.Even in the most right wing of countries, governments will inevitably choose to intervene to protect what they perceive as in the nation interest.
54 What is Protectionism?Refers to government policies that shield domestic production and producers from foreign competition.
55 How does Protectionism Work Degrees of InterventionPersuasion (Minimum)Manipulation of the tax systemThe awarding of government contractsGranting subsidies and tax concession policies
56 Trade Restrictions as Protectionism To protect domestic Industries from foreign competitionTariff refers to a tax imposed by the importing country when a good crosses an International boundary
57 An Example of a Protective Tariff A Canadian Tariff of 15% is imposed on foreign automobiles. The automobile costs $5,000/ This means the tariff will be $750. When exported to Canada the Canadian price will be $5,750.
58 An Effect of a Protective Tariff Producers dependent on protection cannot normally export since their costs are often above world prices.They depend almost entirely on the domestic market.
59 Economic Losses from Tariffs Often Exceed their Benefits A tariff is wastefulIt leads to the substitution of higher cost domestic products and lower cost imports.Increase in economic rent which is economic rents are "excess returns" above "normal levels" that take place in competitive markets
60 Trade Restrictions as Protectionism Non-tariff barrier refers to any action other than a tariff that restricts International tradeQuotasLicensingRegulationsCan be seen as worse than tariff barriers
61 Political Realities Ensure Protectionist Policies Politicians are likely to ignore tariffs or pay lip service to free trade elsewhere.To support tariffs where the protectionist vote is concentratedPoliticians who would gain by repealing tariffs may vote against it in trade off for other issues they are interested in.
62 Canada Pioneers Canadian Content Provisions Easier for companies to import when they produce in Canada a certain proportion of the content of goods they sell.Became ingrained in Canadian broadcast and magazine production. Major mandate of Canadian Radio and Television Commission (CRTC)
63 Cultural Protectionism The CRTC's Over-the-top 'Fact Finding Mission': Key Submissions Submitted by Adam Webb on Wed, 07/13/ :04 Front Page Media News PostFor the second time in two years the CRTC has requested submissions from concerned parties on the increasing prevalence of over-the-top (OTT) services.Like so many of the Commission’s actions, the decision to prematurely reopen discussion is derived from a mix of obsessive cultural concern, private sector lobbying and a dependence on external research.
64 Section 4: Arguments for Protection Industries fearful of foreign competition.Those intended to influence the composition of production.Those intended to influence the level of employment.Those intended to influence the distribution of income.
65 Protection of Infant Industries When foreign competition is reduced or eliminated by import barriers, new domestic industries can develop rapidly.Protection frequently cannot be removed because the domestic industries never develop sufficient competitive strength.
66 National Defense Argument Seeks to avoid dependence on foreign sources for supplies of essential materials or finished products that might be denied in time of war.
67 Counter Dumping Argument Dumping occurs when products are made available as imports at prices lower than the prices prevailing in the exporting country.
68 Redistribution of Income Argument for Protectionism Refers to a country's ability to gain income at the expense of other countries by imposing tariffs or other import barriers.Invites retaliation.
69 Increasing Employment With imports reduced, demand for domestic substitutes will be stimulated expanding production at home.Referred to as “Beggar-thy-Neighbor”It invites retaliation by other nations.
70 Outsourcing and Off-Shoring of Employment Outsourcing involves moving a portion of production outside of a firm.Off-shoring entails sourcing part of inputs outside the country.
71 Note: Authors’ calculations from data. Source: Statistics Canada, Input–Output AccountsImport share of service and material inputs in the business sector, 1961 to 2003
72 Conclusion: Officially Countries Deny Protectionism and Favor Free Trade When economies are booming and jobs seem secure, most people tend to support free trade.When recessions occur, many countries become more protectionist because of national interest and pressure from organized labor and other interest groups.
73 Roles of Agriculture and Manufacturing Industries in Canada Historically Canada industry and agriculture were impacted by Mercantilism theoryMercantilism is an economic theory that there is a fixed amount of wealth in the world and that a nation's prosperity depends on its success in accumulating wealth by exporting more than it imports. European nations attempted to put it into effect through commercial policies designed to produce a favourable balance of trade, through acquisition and development of colonies as exclusive markets and sources of raw materials.
74 Context: Relationship of Agriculture & Manufacturing in GDP terms Urquhart, 1988: Table 2.13: New Estimates of Gross National Product, Canada, : Some implications for Canadian DevelopmentAlison Kemper ADMS 101030 May 201174
75 Agriculture in Canada Maritimes The British promoted agriculture in the Maritimes to provision both its military and merchant fleets and supported trade to the West IndiesAfter 1850 Maritime agriculture was affected by 2 principal developments: the transition throughout the capitalist world from general to specialized agricultural production and, especially after 1896, the integration of the Maritime economy into the Canadian economyAfter 1896 the boom associated with Prairie settlement opened the Canadian market to fruit (especially apples) and potatoes
76 Agriculture in Canada Quebec Despite being a feudal system agriculture took a back seat in early Quebec to the fur tradeAgriculture was never a major export player in Quebec, It was not until 1640 that is was even self-sustainable in agriculture and even that disappeared in the 1830’s.Later 19th-century Québec agriculture was marked by increases in cultivated area and productivity, and by a shift from wheat production to dairying and stock raising.
77 Agriculture in Canada Ontario Agriculture in what is now Ontario was dominated by wheat production. Wheat was the crop most easily grown and marketed and was an important source of cash for settlers.British tariffs (Corn Laws), US tariffs and crop failures (the midge, 1858) significantly hurt the wheat trade in the first half of the 19th century. British tariffs were offset when preferential tariffs were introduced for Canada. Also the reciprocity treaty with the US from helpsLivestock raising increased after 1858 and with the introduction of factory cheese making a large cheese industry developed in OntarioIn the late 19th and early 20th century with urbanization there was a increased demand for market gardens and beef and milk product to feed the cities. It also put a drain on farm labour.After a period of strong income the depression made it difficult to sell crops so the government regulated parts of the agricultural sector and created marketing boards that still exist today. The most important is the Milk Board
78 Agriculture in Canada Prairies Confederation was the spur to the agricultural development of the Prairie West.Purchase of Ruperts Land by the government and the support to populate the west with farmers led to this expansion.The creation of Marquis or Winter Wheat in 1907 overcame the short growing season.Large scale ranching on leased land was started in AlbertaAfter the boom of WW1 the price of wheat declined and stayed depressed throughout the 1930’s.During this period of time technological advances were made with the invention of the combine.Much of the infrastructure for farming and transportation was controlled from central Canada. Farmer’s resented an formed what has become the “United Grain Growers”One organziation that came out of this period is the Canadian Wheat Board to be the sole marketing agent for Canadian wheat and barley
79 Agriculture in Canada British Columbia Agriculture in BC was basically only to supply local markets and other industries in rural BCFruit production began in the Okanagan Valley in This remains the dominant agricultural activity in BC.
80 Manufacturing in Canada Manufacturing in Canada had its beginnings early in the 18th century, but it was not until the late 19th century, with the development of electricity and a national political objective, that it achieved significant growth. Throughout the 20th century, manufacturing has contributed significantly to the economic well-being and prosperity of Canadians
81 Manufacturing in Canada Manufacturing in Canada began with flour mills. The first gristmills were built in New France in the 17th century and, by 1840, there were 400 in UPPER CANADA and LOWER CANADA producing flour for domestic and foreign saleIron smelting began in the 1730s at the FORGES ST-MAURICE near Trois-Rivières, Québec.With CONFEDERATION in 1867 came geographic expansion, construction of the CANADIAN PACIFIC RAILWAY, and new settlement bringing population increases, skills and capitalEight years later, John A. Macdonald's NATIONAL POLICY established protective tariffs to encourage domestic processing of Canadian materials
82 Manufacturing in Canada During the 1870s and early 1880s., the discovery of electricity and the subsequent harnessing of some of Canada's vast hydro resource provided industry with an efficient, low-cost source of hydro-electrical energy. At the same time the extent of the mineral wealth beneath the Canadian Shield began to be realized.Between 1945 and the 1990s, manufacturing has accounted for 22-24% of Canada's total real output of goods and services.
83 Manufacturing in Canada Four developments in trade policies and practices in this period affected Canadian manufacturers substantially: the Canada-US Autopact; the GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT); the world competitive environment, particularly the emergence of lesser developed countries; and the bilateral FREE TRADE agreement with the US reached in late 1987 and its expansion in the late 1990s to include MexicoWith "freer trade," the volume of manufactured goods imported into Canada has increased. Canada's degree of trade exposure is high by international standards,Ontario and Quebec dominate the manufacturing sector in Canada though the western provinces are increasing particularly in the area of extracting technology.
85 Sectoral Structure of Canada’s Economy from 1901-1961 EstablishmentsEmployees192022,532598,893193022,618614,696194025,513762,244195035,9421,183,297195538,1821,298,461195637,4281,353,020195737,8751,359,061195836,7411,289,602195936,1931,303,956196032,8521,275,476196132,4151,264,9468585
87 Canada’s First Great Manufacturer: The Story of Massey-Harris
88 Massey Harris Who were the Key Players in the Case Origins . Daniel Massey Jr.What type of Individual was he?
89 Massey HarrisInternational Events ?Effect on Daniel Massey Jr.?
90 Massey Harris Development of the Business Demand was significant, Why What significant change happens in the businessWhat did Hart bring to the business?What was one of his key strategiesWhat supported his expansion?What else was the company facing?What was the significanceWhat Innovations were there?
91 Massey Harris Marketing the Business What did Hart do the market the business and increase shareWhat did Massey launch that created a direct link between the manufacturer and the farmer.
92 Massey Harris Questions Hart Massey faced: What Does he Do? Expand into US?Export to Europe?Focus on Domestic Rivalry?What Does he Do?What assisted him?Where did he finally expand to?
93 Massey Harris Change of Leadership Competitive Position ? What Happens?Competitive Position ?How did Massey deal with it?
94 Massey Harris Government Policies Another Management Change What Policies Helped ?What Policies Hindered?Another Management Change
95 Group 1 AssignmentNo less than 5 and no more than 8 members in a groupIn your group assign one person with a lap top and internet access to be the scribe.On the first page of your template please put your assigned group number.Put the name of each member on the cover of the template that was ed or downloaded from the websiteThe scribe will type out the answer to the questionsAt the end of the class the scribe will me with the filled out attached template and will copy each member of the group. In the subject line please put your assigned group numberI will mark it and will return a copy of the marked paper prior to each person, on the cc list the next class
96 Next WeekReadingsCase: Relentless Change: Wars, Depressions and Dynamic Growth, pp AND CNR, ppThe CNRKeynes in CanadaThe Depression in CanadaSocial Welfare in CanadaCrown Corporations in CanadaRasmussen's slides on Crown Corporations