Distinctive contributions to Canada's economic history came in the 1920s and 1930s both from economists such as H.A. INNIS and from historians such as D.G. CREIGHTON, who stressed the importance of what they called "staple products" - fur, fish, timber, wheat, metals - whose markets were abroad. Emphasizing the importance of Canada's distinctive geography - the Canadian Shield and the Great Lakes-St Lawrence system - they traced interactions between geography, resources, foreign markets and the inflow of people and funds from abroad. They treated regional growth in relation to the staple products.

More recent approaches have supplemented the old with modern economics and statistics. Work has been done in areas, including WORKING-CLASS HISTORY, urban growth, BUSINESS HISTORY and the industrial development of central Canada, that fitted rather poorly into the STAPLE THESIS. Meanwhile, historical geographers produce invaluable material on settlement patterns and on the growth of towns, while regional studies, which staple theorists treated as components of nation-building, have become routes to regional self-confidence, especially in Québec and Atlantic Canada. Marxist scholars share business and labour history and other fields with scholars whose ideologies are very different.

Although the following sections describe Canadian economic history by region, the country is historically a single economic unit. The FUR TRADE first created a single transcontinental trading economy; since Confederation in 1867, labour and finance have moved freely among the regions. The improvement of transportation - the railways between 1867 and 1915 (see RAILWAY HISTORY), and the highway and pipeline systems after 1945 - has helped. The provinces have become important markets and suppliers for one another, so that an investment boom in one region such as the Prairie West could create a nationwide boom, while a slump in Ontario manufacturing becomes a nationwide slump.

Most of the native peoples lived by hunting and gathering; only among the Iroquoian groups (Huron, Iroquois, Petun, Neutral) was agriculture established. Fur-bearing animals were trapped to provide clothing, and silver and copper were used to make ornaments. Trading among native groups for a wide variety of items was common, but there does not seem to have been any specialized merchant class. In the 16th century French and British traders began to buy furs, for which they offered iron tools, weapons and alcohol, all of which the native peoples valued highly. The result was profound economic and cultural changes among the native peoples, who were to play a critical role in the early fur trade.

Permanent European settlers first came to Canada to exploit the FISHERY and the fur trade. Until the end of the 17th century, because the climate and soil were not encouraging, agricultural progress was slow (see AGRICULTURE, HISTORY OF). Like the French, English-speaking merchants engaged in the fur trade; after the Conquest (1759-60), when many British businessmen began to control a large portion of the fur trade from Montréal, they also quickly extended their interests throughout commerce and finance. The population grew through natural increase and through immigration from Britain.

By the 1820s the good agricultural land in the St Lawrence Valley had almost all been taken up. After the North West Company merged with the Hudson's Bay Company in 1821, the transcontinental fur trade was no longer managed from Montréal. But by that time Upper and Lower Canada had developed an immense trade in timber, which went first to Britain and then, after midcentury, to the US and domestic buyers (see TIMBER TRADE HISTORY).

Until the 1780s there was no significant European population in present-day Ontario, although its waterways were used by the fur traders. Settlement began with the arrival of the United Empire LOYALISTS, British and American settlers, and British troops and officials. Forest land was gradually cleared, and export trades in wheat, potash and timber developed. A few roads and canals were built, of which the most important were the Welland Canal and St Lawrence River canals. By 1867 most good land in the province had been claimed, although not all of it was under cultivation.

At the Conquest, present-day Québec contained 3 towns, Montréal, Québec and Trois-Rivières. Ontario contained none. Thereafter, towns appeared along with settlement and with the development of commerce and government. But even in 1871, much of central Canada's industry, including the 2 great industries, milling and lumbering, was dispersed through the countryside or in small villages. After Confederation, however, rapid industrialization and urbanization occurred in both provinces, so that by 1911 half of Ontario's population lived in cities and towns.

From 1870 to 1900 some established industries such as tailoring and shoemaking were becoming factory activities, and provincial governments began to regulate working conditions. MINIMUM WAGE legislation came much later: Ontario adopted it partially in the 1920s. Some unions had begun in the 1830s, and in the 1880s, with the rise and decline of the American-based KNIGHTS OF LABOR, union activity increased. But relative to the nonfarm work force, union membership remained small until the 1940s, when federal and provincial protection was extended to unions.

Central Canada's industrial advance was especially rapid between 1896 and 1914, when the whole nation experienced investment and export booms. After 1900 a few industries such as carriage-making and blacksmithing declined. But new industries appeared: electrical equipment and chemicals in the 1890s, cars and aluminum after 1900, pulp and paper 1890-1914, radio and home appliances in the 1920s and aircraft in the 1940s. Cheap hydroelectric power during this period helped accelerate industrial change, as did both world wars and nuclear power in the 1970s (at least in Ontario). In both provinces labour was drawn from natural population increase and immigration.

There were cyclical downturns in the mid-1870s, the early 1890s, the early 1920s and especially between 1929 and 1933; the GREAT DEPRESSION lasted until the war began. Thereafter, economic expansion continued substantially uninterrupted until another cyclical downturn of the early 1980s (see BUSINESS CYCLES).

Because so many of the newer industries were concentrated in Ontario, during the 1920s Québec's economic advance was less spectacular; although it shared fully in the development of pulp, paper and nonferrous metals, it took no part in the automotive industry, and little part in the electrical appliance industries. Also, because a higher proportion of Québec industries were low-productivity activities which could not pay high wages, Ontario workers earned more on the average than Québec workers. After 1945, and especially after the 1960s, these gaps closed. Both federal and provincial authorities spent lavishly to attract factories into Québec; indeed, the Québec government owned plants in such industries as steel-making and auto assembly. Québec's birth rate became the lowest in Canada, and average REAL WAGES rose.

Although the national financial centre had shifted from Montréal to Toronto by the beginning of WWII, Québec's financial system became more sophisticated and more francophone in its attitudes. In the 1970s and early 1980s, as anglophone business and professional people left a province in which they no longer felt at home, there was increasing scope for francophone expertise. Much more serious than the uncertainty among investors were the troubles of Québec's established textile and clothing industries, increasingly threatened by cheaper goods from developing nations. The federal authorities provided advice, new kinds of PROTECTIONISM and adjustment finance. Furthermore, thanks to the presence of Northern Telecom and Bombardier, for example, Québec has become an important player in the game of "high-tech industry."

Agriculture in central Canada began as a battle against forest and climate, passed through an export phase, and by 1900 depended chiefly on the local urban markets which it was not able to supply fully. Around 1800 the farmers of the lower St Lawrence produced an exportable grain surplus, but for most of the 19th century Québec residents depended on grain from Ontario. In turn, for most of the century Ontario regularly exported grain not only to Québec, but overseas. However, after 1880, as Ontario's population rose while its wheat acreage declined, the province gradually imported more wheat from western Canada while increasing its output of oats and other fodder crops. Both Ontario and Québec between 1871 and 1914 specialized increasingly in meat and dairy products. From the 1860s until the 20th century, much cheese, butter and Ontario bacon were sold abroad; thereafter, more of these goods were consumed within central Canada. After WWI, with the decline of the horse and the concomitant fall in oats acreage, the shift to other fodder crops became even more pronounced and some land began to fall out of cultivation. Meanwhile, city growth encroached on farmland.

From Confederation to 1929, spasmodic efforts were made to extend the frontier of agricultural settlement in Ontario and Québec. These efforts were not very successful, but by 1929 there were pockets of farmland around Lac Saint-Jean, the Ontario Clay Belt, Rainy River and Thunder Bay. More important for northern development were mining, and pulp and paper. These activities scattered small communities throughout northern Ontario and Québec between 1886 (when the Sudbury nickel deposits were first exploited) and 1929.

By 1867 the great cities of central Canada were Montréal and Toronto. The former began as a port and commercial centre. By mid-19th century, it was a place of industry, and by 1900 it was producing large amounts of clothing and textile products, electrical equipment, railway rolling stock and many light industrial products. It was also an important financial centre. Toronto, after a slow and inauspicious beginning, developed after 1867 on similar lines, much of its early prosperity being based on Great Lakes shipping. By 1900 both cities had energetic banks and insurance companies and active stock exchanges. Both cities had begun to attract immigrants from central Europe and Italy. It was largely natural increase and migration from Britain that built the cities of central Canada between Confederation and 1914, or even 1939. Indeed, before 1900 many Québecois and Ontarians went to the US, where prospects were better: the nation was not managing to retain the natural increase of its own population (see FRANCO-AMERICANS). However, between 1900 and 1929, and again after 1939, the economic prospects were so much better that emigration was no longer a problem. Really large-scale immigration from Italy and central Europe occurred only after WWII.

In Québec and Ontario, as elsewhere in Canada, urbanization and industrialization were assisted by the thrift and diligence of the population, whose members were also willing to borrow funds and skills from abroad and, at least until the 1970s, to receive immigrants during times of prosperity. Educational arrangements helped, first by providing for general literacy; next, by arranging for higher liberal and professional education; and then, starting in the 1970s, by offering various sorts of specialized secondary and tertiary technological studies in, for example, engineering and agriculture.

By 1987 both economies had become very urbanized, and the "service" industries and occupations were much more important than manufacturing, which in turn was more important than agriculture, forestry or mining. The earnings from the service industries helped to balance central Canada's accounts with the rest of the country, a process to which the sale of manufactures also contributed. This pattern of regional specialization had established itself between Confederation and 1900; Ontario and Québec industrialization was not created at the expense of other regions. Most of the 2 provinces' markets have always been in central Canada because that is where most Canadians live. Also, since the 19th century there have been export markets for many Québec and Ontario manufactures - cheese, sawn lumber, cars, agricultural implements, pulp and paper, refined nickel and aluminum.

Developments elsewhere in Canada, especially in the West, helped accelerate central Canada's industrialization, but they did not cause it. Economic evolution had been similar on the southern side of the Great Lakes, where there is a similar pool of raw materials, capital, labour and skills. Indeed, because on the Canadian side there was more hydroelectric potential, plus nickel, gold, silver, uranium and plenty of pulpwood, in some respects circumstances were more favourable. Since 1878-79 Canada's tariff has protected manufacturing industries, but locational advantages, not the tariff itself, ensured that most of that protected manufacturing would locate in central Canada.

Although there was some early fur trading, serious economic development in the Atlantic provinces really began with the sea fisheries, whose markets were in Europe and later in the West Indies. Much of the 16th-century fishing was conducted from British and European bases. Settlement was slow, especially in Newfoundland. On the mainland some francophone settlers arrived during the 17th century (see ACADIA), and some anglophone migrants from Britain and New England in the 18th, but the European population was small until the arrival of the Loyalists, partly because there was little good agricultural land. Early in the 19th century, Scots settled on Cape Breton. Prosperity came from the fisheries, forests and maritime carrying trades. Colonial lumber enjoyed preferential treatment in Britain (see TIMBER DUTIES), while the carrying trades served the whole Atlantic basin.

By mid-19th century, lumber preferences ended and, in shipping, iron and steam began to edge out wood and sail. Cape Breton coal found a market in Boston; other favourable developments were hard to find. Although there were efforts at manufacturing, local markets were small and communications among the colonies were bad. The Intercolonial Railway to Canada created some new markets for local industry, but the line did not eliminate the locational disadvantages. When the Dominion tariff was raised in 1879 (see NATIONAL POLICY), many Maritime capitalists built factories, only to find that markets were smaller than they had expected and that new managerial skills were needed. Nor could Maritime coal compete in Ontario with Pennsylvania coal. Bankruptcies and takeovers were numerous. However, iron and steel production in Nova Scotia was stimulated by the tariff, by the Dominion's iron and steel bounties and by the post-1900 railway-building boom. By 1900 Halifax had become a local financial centre whose capitalists were raising money not only for local industry, but for utilities in Latin America. But Maritime banks tended to fail, merge or move their executive offices to central Canada (see BANK OF NOVA SCOTIA; ROYAL BANK).

During the 19th century, Newfoundland acquired a settled population largely by immigration from Britain. The rest of the region attracted few migrants, at least after 1867, and the population grew slowly: much of the natural increase flowed to the US or to other Canadian regions.

The 1920s and 1930s were unhappy decades in the Atlantic region. The iron, steel, coal and machinery industries were in chronic difficulty and, like the fishery, they suffered severely in the Great Depression. Nor did new manufacturers make much headway, in spite of continuing federal subsidies for rail transport. The few rays of hope included new pulp and paper plants and new protected markets for apples and lumber in Britain. WWII brought hectic prosperity to those communities which served the naval and air bases, and after 1945 the situation improved. New hydroelectric plants and new governmental initiatives attracted new industry, but these programs had some successes and many failures. More useful to economic growth, perhaps, was the new army base in New Brunswick. By the mid-1980s, offshore oil had been discovered in commercial quantities, and there were good prospects for natural gas; but the old heavy industries and the fisheries were in chronic trouble and were kept alive by government subsidy (under various names) and government ownership.

Economic development in western Canada began with the fur trade. By the end of the 18th century, the traders' activities on the prairies had produced a small population of Métis who, like the native peoples, depended on the trade. Fur-trade posts were scattered throughout the region, and on Vancouver Island, the city of Victoria began as an HBC trading post.

Settled agriculture began in 1812 with Lord Selkirk's RED RIVER COLONY. However, the building of the Canadian Pacific Railway in the 1880s gave Manitoba a wheat economy. Winnipeg became a centre for commerce and railways, and soon acquired a few factories. In the late 1890s, the prospects for development brightened as world prices rose, transport costs fell, methods of dryland farming improved, and more appropriate varieties of wheat became available. Until 1929 the Prairie provinces enjoyed an immense expansion of the wheat economy, onto which was grafted, before 1914, a very much larger rail system, a network of cities and towns, coal mining and ranching. By 1914 the frontier of settlement had been pushed well toward the northwest, attracting migrants from many lands. The result was a regional economy which depended almost entirely upon the world price of a single crop and on local yields, both of which fluctuated greatly. There was little diversification except in Alberta, which began to produce small quantities of oil and gas.

British Columbia's economic evolution before 1929 was very different. There was little agricultural land, and most farm products were locally consumed. There were few European residents except fur traders until the FRASER RIVER GOLD RUSH of the 1850s. After the gold rush, coal mining on Vancouver Island was no substitute, and until well after Confederation the population grew very slowly. However, with the construction of the CPR and that of the Canadian Northern Railway and Grand Trunk Pacific Railway between 1900 and 1914, much more rapid development and urbanization occurred. Important activities were lumbering, the fisheries, and copper, silver, coal and base metal mining in the south. Ranching and fruit-growing were also established. Some industries, especially shipbuilding and repairing, were set up, and the great smelter at Trail came into operation in 1920.

With regular transpacific sailings to the Far East and Australasia, Vancouver became an important port, not only for the province's own goods but for prairie grain. After the Panama Canal opened in 1914, trade with Britain became faster and much cheaper. Coastal shipping also developed, partly to serve the lumber trade. Thanks to urban growth, there was rapid development of hydroelectricity. There was very large immigration, not only from elsewhere in Canada but from Britain and Asia. Oriental immigration was much feared and rigidly controlled, although a small Oriental community did develop.

From 1914 to the late 1940s, especially during the Great Depression, conditions were often difficult. All 4 provinces felt themselves to be the victims of Canada's tariff policy, which raised the price of the manufactured goods that came from elsewhere but did nothing for the price of the primary products and simple processed goods which they had to sell. Prairie drought, adverse price movements and foreign protective tendencies, as in the 1920-22 recession and the slump of 1929-33, were serious matters. Ottawa provided relief money, protected the provincial governments from bankruptcy, and tried through trade negotiations to improve the conditions for western exports (see OTTAWA AGREEMENTS). After the collapse of the co-operative wheat pools in 1929-30, Ottawa also supported the marketing of prairie wheat, although until the middle of WWII the farmers could market their wheat through private channels if they wished. Wartime prosperity helped western farmers pay off their debts. In BC, meanwhile, co-operative marketing increased for such goods as apples and peaches. But new manufacturing plants were slow to appear. By 1939 a Ford assembly plant near Vancouver supplied export markets in India and the Pacific, but when these markets vanished after 1939 the plant vanished too. WWII saw a rapid development of shipbuilding and aircraft construction on the West Coast, but after the war these industries dwindled or vanished.

The years after 1945 saw new resource-based development, rapid urbanization and dramatic increases in standards of living. The most striking new projects were in oil, gas, pipeline-building and potash, which transformed the economies of Alberta and Saskatchewan. BC began to produce oil and gas; BC and Manitoba acquired immense new hydroelectric plants, and aluminum smelting began at Kitimat, BC, in 1951. There were new export markets, as oil and gas moved to Ontario and the US and as BC coal and lumber products moved to Japan. Prairie wheat, which gradually lost its old markets in Britain and Europe, eventually found new markets in the USSR, China and in developing nations. Federal policy was helpful: Ottawa began to make EQUALIZATION PAYMENTS to Manitoba and Saskatchewan, and it provided a protected Ontario market for expensive Alberta oil 1960-73, although thereafter it held oil prices below world levels. It also reduced or removed many tariffs. Lumbering and pulp and paper expanded, and most of the time did well because of the North American construction and communication booms. In 1967 the exploitation of Alberta's tar sands (see BITUMEN) began.

By 1987 Alberta had developed a petrochemical industry and Manitoba was producing buses and light aircraft. Yet the western provinces remained heavily dependent on the export of a few primary products and on the investment activity which the primary industries could generate. The West remained "development-minded," as it had been between 1896 and 1914.

By the 1980s most Canadians had become city dwellers and the majority of workers were in white-collar jobs, generally in the service-producing industries. Disparities in earnings, living standards and ways of life had been much reduced, especially after 1945. Nevertheless the various regional economies were still very different. Manufacturing remained largely a matter for Ontario and Québec, while the 4 western provinces still generated immense surpluses of natural products. In the Atlantic provinces, living standards remained comparatively low and prospects were much less bright. Partly for this reason, interregional subsidies have become deeply entrenched in Canada's way of life.