9.8 Economic and Social Change
Building the canals required two things of critical importance to the economic, social, and political history of Upper and Lower Canada: money and a workforce.
Banks and Locks
First, banks were required because all that debt had to reside somewhere. An agency was needed to both store the growing amounts of capital in the colonies and to act as a lender to entrepreneurs and governments. These early banks also coined the local currency. The Bank of Montreal appeared first, in 1817, followed by the Bank of Quebec and the Bank of Canada (also in Montreal), and then the Bank of Upper Canada. All were chartered in the years between 1819 and 1822, and other banks would be established — a flurry of them in the 1830s — though not all lasted more than a few years. The Bank of Upper Canada held a monopoly position in the colony for nearly a generation, and it was very much an instrument of the Family Compact: the Bank’s directorship was dominated by members of the colony’s executive council.[1]
The interests of the bank were thus indistinguishable from those of the political elite in the colony and the colonial elite was very interested in canals. The bank’s inaugural president, William Allan, was also an active investor in and a director of the Welland Canal Company. Allan was not alone in this regard. The interlocking directorships between the bank, the government’s executive council (which overlapped, too, into the legislative council), and the Church of England under the leadership of the Reverend John Strachan became the source of the Family Compact’s unquestionable authority in the colony and a target for critics in the 1830s.[2] As a consequence of this effective strategy on the part of the Family Compact, the Bank of Upper Canada was instantly a force with which to reckon in colonial policy making.
Second, the canal-building projects required a large workforce, more than could be mustered in the colonies. The arrival of several hundred Irish Catholic canal builders or navvies, some of them veterans of similar projects in the British Isles, changed the demographics of Montreal for generations. The 500 or so employees of the Lachine Canal Company were the largest non-military workforce ever assembled in Canada. The conditions under which they worked were appalling (see Chapter 10); they represented, however, a small army of wage earners whose survival depended on the emergence of a service economy in Montreal and Lachine.
New immigrants are always a convenient target for blame when economic conditions tumble and competition for jobs intensifies. When the canal projects were completed by 1830 (setting aside various expansions and improvements in the years to come) hundreds of economically vulnerable Irish navvies found themselves out of work. This happened at a time when wheat prices in Britain were falling and sales of farmland in Upper Canada were in decline.
In the years between 1800 and the 1830s there had arisen, pre