Economy under British Rule
New trade partners
 Britain also follows the economic policy of
mercantilism. Quebec and 13 Colonies provide
natural resources to Britain, who sells back finished
products to the colonies.
 Great Britain tried to only buy resources from within
its Empire (protectionism) and gave preferential
tariffs to British products (less tax on British
 Small number of British merchants dominate trade
over Canadien merchants because of their
connections to government.
The fur trade and forest resources
 There is intense competition between companies to
control the fur trade. By the the 1820’s though,
demand for fur in Europe had dropped.
 Increase production in the timber trade disrupted
fur hunting grounds as well. The timber trade takes
over as the main economic activity of the colony.
 Farmers start to work in timber yards during the
 The timber trade also encouraged colonization of
new areas like the Outaouais and Saguenay.
Cape Diamond Timber Depot in Wolfe’s Quebec
 Agriculture was still the population’s main economic
activity. Most families operated a family farm that
fed themselves and surpluses were sold in the
 At first, most most farmers grew wheat, but by the
1830’s and 1840’s a larger number of different types
of crops were being grown.
The adoption of free trade and financial
 In the 19th century, many merchants pressured the
British parliament to give up the economic theory of
protectionism and mercantilism, and embrace the
economic theory of free trade.
 Free Trade: getting rid of tariffs and custom duties
on imports and exports between participating
 For Canada, this meant that its products had to
compete internationally and its main trading partner
would be the US instead of Britain.
The adoption of free trade and financial
 This new economic situation created a great
opportunity for British and American merchants to
invest in new industries.
 To do that, they needed capital. Merchants merged
their money together to form financial institutions
like the Bank of Montreal (1858) which could lend
out money for capital investments in building new
 Canadian society will now be divided into two
groups; those who own businesses and have access to
capital and those that work for wages.
First Phase of Industrialization
 During the 1850’s, Canada begins to experience its first
phase of industrialization.
 Elite merchants in Canadian society also occupied
positions in the colonial government. They used their
position to have the government use public money to
build infrastructure like canals and railroads that would
help connect their industries to main ports. (Ex: Lachine
 This time period also saw the creation of factories in
urban centers like Montreal and Toronto. It also meant
that more people were now living in cities (urbanization)

Economy under the British Regime