No. 29.
Mr. Shaw to Mr. Seward.

No. 160.]

Sir: I have the honor to submit a preliminary report upon the commercial interests of Ontario, in compliance with the instructions contained in the Departmental circular of August last.

The close proximity of the province of Ontario to the United States, forming, as it does, for all trade purposes, a State of the Union, without exchange and with abundant and cheap avenues for commercial operations, renders the commerce of the country almost identical with that of the State of Michigan.

Drafts on New York can be purchased in Toronto as cheaply as in Chicago, and banking facilities are as extended and intimate us the demands of trade require.

Moreover, the communications between this province and the States are convenient and ample for all possible increase in the commerce between the two countries for all time to come. Bounded on the entire southern border by the great inland lakes and rivers, whose waters wash several of the Middle and Northwestern States of the Union, cheap transportation is thus forever secured for the staple productions of Ontario during certain seasons of the year; and the fine railway system of the province, comprising the Grand Trunk, Great Western, and Canada Southern Railways, unite in making complete the spendid avenues, by water and rail, over which the commerce of the country is cheaply and rapidly moved.

[Page 92]

There are three great staple productions in this province, viz, lumber, wool, and barley, which, in the main, make up the exports.


The vast pineries of Ontario are well known the world over, and the supply is still ample for many years to come. It is true, however, that lumbering operations each year become more and more difficult and expensive, owing to the fact that the pine bordering on the river bottoms and near navigable waters is being cleared off, and it is consequently now more laborious and costly to get logs for the mills. Notwithstanding this, vast areas of excellent pine-lands abound, and the supply for a quarter of a century or more to come will be equal to the probable demands for Canadian lumber in the sections of the United States where it now finds a market.

The financial depression which has existed in the States since 1873 has seriously affected the lumber trade of Ontario, because the principal markets for the pine lumber manufactured here are found there.

Prices have ruled low and the production has been limited and, on the whole, little profit has been realized during the past four years by those who have been engaged in this industry.

A large majority of the lumber manufacturers are feeling more hopeful over the future promise for increased prices and orders, but at present the trade is not in as flourishing a condition as those embarked in it desire to see.

Little need be said about the peculiarities of the lumber trade in this connection, for the reason that enterprising Americans early made large investments in the pine-lands of Ontario, and have for years been engaged in manufacturing and exporting lumber.

Some of the finest mills in the country for manufacturing lumber were designed and constructed by them, arid fitted up with machinery invented in the States. In fact, in many instances the bulk of the machinery was of American manufacture. The approximate value of the exportations of pine lumber of all kinds from the province of Ontario, for the year ending 30th September, 1876, was $2,652,906.43.


The wool grown in Ontario is an important article of commerce and a source of great profit to the people. A large proportion of the clip finds a ready market in the United States.

The combing wools of the province are a specialty, and are mainly used in manufacturing American worsted goods in the Eastern States. It has been found impossible to grow this long wool in hot climates, and for this reason it always commands a high price.

The climate of Ontario appears to be well adapted for the Leicester and Cotswold breed of sheep—the producers of the rare long-combing wools; and every attempt thus far made in the Southern and central portion of the United States to grow this wool by cross-breeding or importing has failed. In some sections of one or two Northwestern States a fair quality of this wool has been successfully cultivated, but the amount is not large.

The combing wools of this province are of unusual length and quality, and careful American buyers are always prompt in securing the choice clip, paying excellent prices to the farmers for the same.

[Page 93]

The annual production of wool in this province is yearly on the increase, resulting from the gradual development of the country.

The average yield during the past three years has not been less than 6,000,000 pounds annually. At present only a small proportion of the wool exported to the States is returned in the shape of manufactured goods. However, with wool of unsurpassed quality near at hand, and, by the aid of skilled labor and improved machinery, combined with experience in manufacturing cloths suited especially for Canadian markets, there is reason, to believe that, in the near future, much of the wool now exported from this province to the United States will be returned again from American manufacturers in the shape of cloths of various descriptions.


Canadian barley is famous for good qualities of weight and color, and like lumberand wool finds its chief market in the States. For the manufacture of pale or amber ales it is unrivaled, and for this reason mainly, brings about ten cents per bushel more than American barley.

In Ontario this is a very valuable crop to farmers, and yet, owing to the limited area in which it can be profitably grown, the annual yield does not largely increase from year to year.

It is true that there is a comparatively large consumption of barley in Ontario, but the great bulk of the crop raised here is exported.

As yet there is no market in Canada for American ales. Large importations of English ale and porter are made, but the quantity is yearly becoming less on account of the excellent quality of the ales manufactured in this province, and it is not unreasonable to believe that in a very few years little or none will be imported.

lager beer.

Within the past two years there has been an extraordinary development of the lager-beer trade in Ontario. This mild and popular beverage is now rapidly coming into use, and promises to expel much of the intoxicating liquors which are now sold here. Thus far, however, the quality manufactured in Ontario does not compare favorably with the best lager-beer manufactured in the States. For this reason it would seem that an extensive trade in this article might be cultivated with this province, from points where transportation is cheap and rapid.

Prominent manufacturers of this article in border cities contiguous to Ontario, would do well to examine this opportunity of extending their trade, for there can be no question but that an excellent opening exists to introduce and secure a good market for the best quality of American lager-beer in Ontario.

other cereals.

There is occasionally a surplus supply of wheat in Ontario, but the amount exported is insignificant. The crop as a rule is barely sufficient to supply the home consumption and often it does not do this, even.


The climate is peculiarly well adapted for raising peas, and American seedsmen have large quantities grown here for seed purposes. The bug which generally destroys this crop in the States does not injure it here, hence the great demand for “seed peas” from Ontario.

[Page 94]

imports and exports of ontario.

Nothing can so clearly exhibit the commerce of Oatario, and show its importance as a market for American goods and manufactures, as a statement of its imports and exports. I herewith give the annual statement of the value of exports, the value of goods imported, and the amount of duty collected at each port in the province of Oatario during the fiscal year ending 30th June, 1875, the latest data available.

The same is taken from the best Canadian authority:

Ports. Exports. Imports. Duty.
Amherstburg $231,280 $93,277 $4,999 79
Belleville 590,190 458,102 36,043 63
Brantford 53,066 619,057 110,888 79
Brighton 137,503 11,076 883 56
Brockville 488,117 716,301 55,480 89
Burwell 19,373 2,093 183 56
Chatham 306,965 156,520 19,308 76
Chippewa 1,064 7,329 764 02
Clifton 2,064,298 3,110,897 200,085 40
Coburg 265,525 124,809 13,394 34
Colborne 25,361 1,038,523 7,013 29
Collingwood 349,752 11,668 63
Cornwall 53,757 220,224 3,758 26
Cramahe 44,243 12,652 1,114 79
Darlington 122,239 240,240 24,103 00
Dover 53,736 130,602 1,285 61
Dundas 23,003 100,368 8,798 08
Dunnville 17,374 32,012 4,280 29
Elgin 4,471 2,049 206 32
Fort Erie 2,184,741 659,759 37,586 46
Gananoque 54,722 91,211 5,228 45
Goderich 160,572 229,129 5,769 97
Guelph 276,857 655,585 91,504 95
Hamilton 607,112 5,342,442 697,373 30
Hope 1,265,135 173,356 13,390 11
Kingston 915,936 5,682,821 209,049 01
Kingsville 22,988 1,861 184 95
Lindsay 53,825 7,419 42
London 272,584 2,080,060 330,089 06
Morrisburgh 197,759 21,185 3,979 85
Napanee 673,619 79,365 9,205 57
Newcastle 36,189 41,634 3,168 72
Niagara 68,042 5,641 80
Oakville 74,616 14,153 1,760 55
Oshawa 119,680 189,232 13,662 57
Ottawa 986,183 1,692,390 249,467 60
Owen Sound 435 37,945 5,443 84
Paris 91,979 145,971 9,535 37
Penetanguishene 109,767 8,821 830 97
Peterboro 136,224 14,172 65
Picton 287,312 28,071 2,426 33
Prescott 464,877 493,947 21,480 54
Prince Arthur’s Landing 179,922 87,809 10,202 84
Rowan 47,583 4,395 1,769 23
St. Catharines 1,816 816,215 72,576 26
Sarnia 737,318 1,015,647 62,058 03
Saugeen 6,479 14,865 129 74
Sault Ste. Marie 134,043 143,999 20,740 48
Stanley 200,288 58,995 2,585 52
Stratford 244,059 255,395 39,131 41
Toronto 1,870,763 14,806,838 2,293,646 13
Trenton 517,300 16,927 1,775 46
Wallaceburgh 236,814 25,766 3,298 34
Whitby 394,142 97,958 9,631 26
Windsor 260,575 754,443 47,909 21
Woodstock 62,071 144,385 18,402 22
18,187,801 43,596,549 4,829,489 21
Estimated amount short returned at inland ports 1,709,032
Copyrights 2,005
Total 19,896,833 43,598,554 4,811,489 21

The above table gives the principal customs districts in the province and the respective commerce of each port of entry.

[Page 95]

The following statement shows the imports of Ontario for the fiscal year ending 30th Jane, 1875, with the countries from whence imported:

Imports. Great Britain. United States. France. Germany. Other countries. Total value.
Dutiable goods $14,699,178 00 $10,679,477 00 $384,160 00 $108,106 00 $330,224 00 $26,201,145
Free goods 763,357 00 15,776,209 00 7,425 00 4,706 00 10,435 00 16,562,132
For reprint of British copyright works 2,005
Total 15,462,535 00 26,455,686 00 391,585 00 112,812 00 340,659 00 42,765,282

Comment on this official statement is unnecessary, as it speaks for itself, but the large balance in favor of American manufactures will give general satisfaction to our people, and is conclusive evidence of the increasing popularity of our goods in this market.

manufacturing interests of ontario.

No complete and accurate data are at hand from which minute statements can be made up containing a detailed statement of the various manufacturing establishments in this province. A general review, therefore, will be given of the chief manufacturing industries which now compete with American manufactures.

It can be truthfully stated in the outset, however, that the manufacturing interests of Ontario are not generally as successful as those having capital invested in them expected they would be when established, Various reasons were given for this lack of success, among which are, 1st, the heavy customs-duty of the United States, which effectually shuts out their manufactures from American markets; 2d, the circumscribed Canadian markets; and, 3d, the increasing popularity of American goods. Doubtless these reasons are in the main good, as far as they go; but Ontario is so situated that foreign manufactures can be laid down cheaply everywhere, and agricultural interests largely engross the attention and occupation of the people.

When the recent confederation of all the British North American Provinces took place, under the belief that a new era of rapid development was to follow, manufacturing enterprises were started to such an extent that, failing to realize promptly all the benefits expected from the new political relations, overproduction resulted, and failures and disappointments were the chief fruits of this hopeful period.

It was found that trade has little sentiment, on this continent especially, and also that small and isolated manufacturing establishments cannot, as a rule, successfully compete with older and larger enterprises of a similar character.

Experienced and skilled labor, developed in a long series of years in great manufacturing centers, outrivals all comparatively small competitors. This rule applies to Ontario; for recently American manufactures have became popular on account of their superior style, finish, and low cost. The charge has been made that American goods are sold here at slaughter prices, i. e., below cost, so as to close out surplus stocks. This, however, is not true in the great majority of cases. Occasionally, no doubt, special lots are thus disposed of, but this is a peculiarity of trade common in all countries.

The enterprise shown by American manufacturers in adopting new and attractive styles, and in the use of labor saving machinery, combined with great natural advantages for manufacturing cheaply, all contribute [Page 96]to the success which their productions are meeting with in Ontario and elsewhere. Another and perhaps the controlling reason for the rapidly growing trade in American, manufactures is fully explained in another part of this report.

I am now collecting statistics of all the manufacturing establishments in this province, the quantity of the various articles turned out, and their average wholesale prices.

The difficulties in the way of securing accurate and full lists are so great, in the absence of any well-arranged statistics, that I shall be compelled to embody the same in a supplemental report at a future date.

I shall endeavor to make an exhibit of the industries of Ontario so complete in its character that each industry will be carefully and fully described and the average production of each establishment explained.

short-horn breeding.

The attention given to short-horn breeding by many of the leading agriculturists of Ontario has very considerably increased the amount of capital employed in this branch of agriculture during the past six years. Large sums of money have been expended in importing rare animals from the “old country,” and breeding of “short-horns” on an extensive scale is now carried on with great success and profit.

The climate of Ontario appears to be admirably suited for the breeding of short-horns, and there is little mortality from any cause among the animals. The results are, healthy herds, fine development, and a small percentage of losses by disease.

An extensive trade is carried on between Ontario and the United States in short-horns, as well as in blooded sheep and pigs. American breeders largely patronize the Ontario stock sales, and in turn many fine animals are brought from the States into Canada.

The reciprocal trade relations which at present exist between the two countries in fine blooded stock is mutually advantageous and tends to develop a higher grade of stock in both countries.

* * * * * * *

blooded stock.

The number of blooded animals for breeding purposes exported from Ontario during the present year is larger than ever before. The law allowing free entry to such stock as is designed solely for breeding purposes is, doubtless, a very wise and just one. The rapidly increasing trade in the best blooded animals proves conclusively that American farmers are fully alive to the importance and value of the best stock that can be had, and Ontario furnishes yearly additions to their rapidly increasing herds of cattle and sheep, while rare breeds of pigs and horses find ready purchasers in the States.

horses, cattle, and sheep.

For many years the exportation of horses, cattle, and sheep from Ontario into the United States has been very considerable annually. During the late war immense numbers of Canadian horses were bought here for the Northern Army, while the trade in cattle and sheep was immense. At present, Canadian-draught-horses are much sought after for use in American cities. Thousands of sheep are exported for our markets, while the trade to England is insignificant. The exportation of Canadian beef-cattle to England has been small, and the encouragement not great.

[Page 97]

general observations.

In reviewing the trade of Ontario it will be proper to call attention to several subjects of more or less interest and importance to American manufacturers, merchants, and economists. Perhaps the most cheering sign of the times is the growing popularity among Canadians of American manufactures. Former prejudices, mainly due to differences in political opinions and foreign associations, are rapidly dying out, and, as a consequence, large sales of American goods are now finding their way into this country. Machinery, furniture, and fancy cotton goods are now meeting with great favor. The demand is so great that Canadian manufacturers are complaining loudly of the present Canadian tariff, and clamoring for an increase in the import duties for the avowed purpose of shutting out American goods. The present tariff averages about 17½ per cent. ad valorem, and yet so desirable are American styles in manufactured articles generally that they can be profitably exported to Ontario, and, after paying duty; compete with native manufactures; This results from the superior style and finish, as well as quality, of all cotton goods, and the neat, compact, and ingenious character of manufactured articles in general. From being the exception, American articles have become the rule, and now, in every portion of this province, American dry-goods and manufactures are sold in large quantities.

It is important, therefore, to all who are desirous of extending American trade with Ontario that a full knowledge of the methods of doing business should be obtained, in order that a safe course may be followed in cultivating the same. As a basis, the following statement from the annual circular of the Mercantile Agency may prove to be valuable:

The failures in Canada for the past two years number nearly 4,000. At this rate (the number of traders being 50,000), every second business man in Canada may succeed in ten years. The gross liabilities of failed estates during the two years are over $50,000,000, a sum barely equaled by the entire exports of grain in that period.

This, of course, refers to the trade of the whole Dominion, but when the fact that the total population of the country is a little short of 4,000,000 is considered, the enormous ratio of losses will be self-evident proof of the unhealthy and uncertain state of financial affairs generally.

A large proportion of the trade of the country is centered in Ontario, and consequently the losses to foreign manufacturers and merchants are very great. And yet, owing to the cash system which American dealers with Ontario have adopted, in the main, a very small percentage of the losses above referred to has fallen upon them. A gentleman of high commercial standing in this province, and one of the ablest and foremost merchants also, in a recent letter to the Manchester Courier (English) gives it as his opinion, “that of the $50,000,000 of gross indebtedness in insolvent estates, as referred to in this article, I venture to say (and I don’t think I am wrong) that the American liabilities will not exceed $600,000.”

Remarkable as this statement may appear, it is doubtless approximately true, and this comes from the short credit system of American dealers. In the article in question the writer gives this pertinent illustration: A Toronto wholesale merchant failed, in which “the American trade bore a very fair proportion to its general business,” and the “liabilities, direct and indirect, were about $250,000, and of this amount the American liabilities were about $2,000.”

The English system of giving extensive credits here has induced overtrading in Ontario, and the evils of their long-time credits are now engaging the attention of the best capitalists and merchants in the province. [Page 98]The only safe rule, therefore, for Americans to adhere to in the future is to hold firmly to the cash system.

Close prices and ready pay is the only sound system in selling goods to Canadian merchants who are doing a long credit business with English houses. And, moreover, Canadian merchants having got into the habit of making cash or prompt payments for American manufactures they are content to follow this plan. They get liberal credits in the “old country” and arrange to “pay cash” for goods, &c., purchased in the States, and thus it happens that when failures overtake them the losses fall almost wholly on the long credit adherents.

Nor is this all: many of the soundest business men in Ontario, dissatisfied with the English credit system which encourages recruits in the already overstocked wholesale trade, on small capital, prefer the close cash dealing with Americans, and appeal to English dealers to put on the brakes and adopt the cash system also.

As one deeply interested in the extension of American manufactures in every legitimate way, the result of my experience has taught me that the only wise way to extend our trade with the province, is to adhere strictly to the sure and just cash system now in force. This alone will bring about a healthy expansion, and at the same time secure satisfactory results. A still stronger reason for such action may be urged, and that is one of almost vital importance, and it is this: The demoralizing credits made in England to Ontario merchants, without wise discriminations, and in fact in many cases without any discrimination at all, are leading the best of them to prefer purchasing goods in American markets, because the cash system, rigidly adhered to there thus far, makes it impossible for weak houses here to enter largely into competition in American manufactures, and so they have the field to themselves.

This consideration has had a very marked influence in cultivating and snaking popular the importation of American goods into this province. And it is no doubt true that the gradual loss of trade to the English manufacturers has, to a certain extent, induced them to go beyond a prudent point in giving credits in the hope of regaining what the Americans have won from them mainly through the popularity of their cash system.

It will be seen, therefore, and for the reasons briefly stated, that American manufacturers have only to continue in their wise policy of cash payments to soon largely monopolize the very best trade in Ontario, in all lines of goods in which a fair competition with English manufactures can be maintained.

The lower rates at which money can be borrowed in England enables manufacturers to hold a considerable percentage of profit in producing their goods, but this is more than overbalanced by their unwise long-credit system so that every consideration of safety and sound business policy would seem to commend the wisdom of the present course pursued by American manufacturers in rigidly maintaining the cash system.

The employment of Canadian agents well acquainted with the trade of the province, and men of the highest character who are familiar with the methods of doing business here, and who have the full confidence of the wholesale merchants, would be very beneficial. By doing this the natural timidity of purchasers here would be more readily overcome, when approached by agents for American goods, and also an intimate knowledge of the financial standing of merchants would be of great value.

The Canadian system of “commercial agents” closely resembles that so extensively employed in the United States. Some of the wealthiest [Page 99]and oldest houses in Ontario employ no “runners” and disapprove of the custom. They claim that constant importunities and special inducements made by persuasive agents tend to demoralize trade, and encourage overpurchases. The credit system here makes it possible for country merchants to order large stocks of goods on long time, and in too many instances due caution is not exercised in their purchases.

The commercial history of this system in Ontario is probably similar to that across the border, but there is reason to believe that there is a growing disposition among the most influential and leading wholesale merchants here to gradually abolish this, to them, obnoxious feature of trade in this province.

Communication with all parts of Ontario is now so easy and cheap that country merchants can readily visit the chief centers of trade and select such lines as are needed in their immediate localities. This fact suggests the propriety of bringing American manufacturers and merchants into confidential relations with the reliable wholesale merchants of Ontario, and then to allow no sales to be made to the retail trade. The reason for this will appear more clearly when it is known that country merchants in Ontario, as the outgrowth of a long-established custom, depend, in great measure, upon the credits which the wholesale dealers grant them. If, therefore, American manufacturers sell small lots of goods to retail dealers, even when prompt payments are made, the tendency is to cut into the regular business of the wholesale merchants, and ill feeling and dissatisfaction is the outgrowth of this policy. If, on the other hand, the wholesale dealers in the United States confine themselves exclusively to the wholesale trade in Ontario, the same amount of goods will be sold and better relations will exist.

This point is one of more importance than many at first thought may acknowledge, but frequent and forcible criticisms have convinced me of its great weight. Those who do not fully agree with this observation will do well to take a trip through the province, and carefully consult the best authorities on this subject.

I am, &c.,