Thursday, May 3, 2012

The Almost Canadian Revolution of 1863

The colonial provinces of New Brunswick and Nova Scotia were City friendly, that is to say the “gentlemanly capitalists” in London liked what was coming out of the Maritimes – compliance. Staple commodities, investments opportunities and an obedient political class. Ideal for a cartel more concerned with European consumers than British North American property rights. In the Province of Canada – another territorial monopoly claimed by the Crown – events threatened the City cartel.

The year was 1862; the fall of an unpopular Bleu-Conservative government led to the rise of a loose base of independents: “clear grits,” Lockean liberals and democratic populists. John Sandfield Macdonald led these radical MP's after Governor-General Lord Monk -- the self-proclaimed “last Governor-General” of Canada -- allowed this coalition to form government.

John S. Macdonald is not to be confused with John A Macdonald, whom was his rival at the time. S. Macdonald represented the opposition to the “moneyed corporations” that, in his view, drained wealth from society to benefit a few in Europe. His band of MP's were of all sorts but they agreed on one issue: usury laws. A cabinet reorganization in 1863 resulted in three more “rouge” liberals advocating free trade and emphasis on “liberty, ... and reform.”

Luther Holton was one of these radicals. Replacing a moderate Finance Minister, Holton's main goal was tackling the deficit. His budget won the approval of the Globe of Toronto and the Economist in London, two publications with a liberal bias. Holton withdrew the governments account with the Bank of Upper Canada, a firm tied to City interests. Within a few years, the Bank would collapse. Meanwhile, Holton cut spending and financed a smaller debt through the Bank of Montreal, outside the grasps of the City interests.

Thomas Baring was one of these City interests, head of Baring Brothers and Chairman of the Grand Trunk, a publicly-owned railway in the Province of Canada. With Baring was George Glyn, a City banker who too had invested in the railway; both men were sellers and holders of Grand Trunk securities. It had been the aspiration of some in the City to see markets extending to the Pacific Ocean by way of a North American railway – all under the banner of the Crown. Extracting raw materials in the continent's Northern interior was to be a controlled market, influenced by the City's interests. According to Baring, the success of the Grand Trunk was crucial for fulfilling this goal. Unlike Nova Scotia's privately-owned subsidized line, Baring's Grand Trunk was publicly-owned and riddled with bureaucratic inefficiencies. Labour had gone on strike more than once and now John S. Macdonald and a cabinet of radical MP's had formed government. The Grand Trunk was in the spotlight just when Baring needed more capital. He felt that the Canadian taxpayer should pony up; S. Macdonald's government saw things differently.

The economic decolonization message of the government coincided with the beliefs of newspaper-man George Brown, publisher of Toronto's Globe. For Brown there was no contradiction in upholding British traditions while opposing the City. It was the opinion of the Globe that the City elites of “Messrs Baring and Glyn” enjoy “tremendous power” over the Province of Canada. From day one the S. Macdonald government was anti-Grand Trunk; the paper praised the government repeatedly.

S. Macdonald's government also shelved the idea of a federated state between the British North American colonies. One radical MP, J.B.E. Dorion, a “rogue opponent of colonial union” was staunchly anti-centralist. Supporter of the decentralized structure of the United States, Dorion advocated a democratic constitution that would allocate jurisdiction to reflect the popular will in each community. Like many of S. MacDonald's MP's, Dorion opposed the centralization of power, especially in regards to usury laws.

The battle between City interests and the government never erupted into a full scale revolution. The falling price of the Province's securities weakened the radical stronghold. Finance Minister Holton claimed that the City was price-fixing and conspiring with the opposition bring down the government. The fall of the friendly Bleu-Conservative government had damaged Canada's reputation in the London capital markets. As a Finance Minister, Holton had ruined this reputation; it was perhaps for this reason that George Brown conceded with the opposition.

The populist message died down when the Globe changed its tone. Lord Monk dissolved the government and encouraged a broader coalition of both conservatives and radicals to regain stability. There was no way to remain British and anti-City. John S. Mcdonald aligned with John A. Mcdonald and a “Great Coalition” was formed where the status quo of borrowing and spending continued.

This must have pleased C.J. Brydges, the general manager of the Grand Trunk. He wrote in 1864 that Canada must avoid “a state of anarchy and confusion which may eventuate a similar misfortune to those which now afflict the States.” Brydges felt that too much independence leads to war and that power should be centralized. It was this central control, particularly around usury laws, that ensured the populists power and influence to be limited in the future. Brydges saw this as an achievement, a "means of consolidating British interests upon this continent."

Smith, Andrew. British Businessmen and Canadian Confederation. Montreal & Kingston: McGill-Queen's University Press, 2008. Print.

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